TSX posts longest winning streak in 15 months as inflation cools

Businessmen pass the Toronto Stock Exchange sing in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index on Tuesday posted its eighth straight day of gains as energy shares climbed and domestic data added to evidence that inflation has peaked.

The Toronto Stock Exchange's S&P/TSX composite index ended up 67.13 points, or 0.3%, at 20,457.46, its highest closing level since Dec. 2.

The winning streak was the index's longest since October 2021.

Canada's annual inflation rate slowed to 6.3% in December, its lowest since February last year, helped by a drop in gas prices. Investors have worried that Bank of Canada tightening to cool inflation could push the domestic economy into recession.

"We're way past peak inflation and starting to get closer to a more reasonable inflation number ... giving more comfort to the fact that central banks can slow down their interest rate (hiking) cycle," said Sadiq Adatia, chief investment officer at BMO Asset Management.

The BoC has raised its benchmark interest rate at a record pace of 400 basis points in nine months to 4.25%. Money markets expect the rate to peak at about 4.50%, potentially next week when the central bank meets to decide on policy.

The Toronto market's energy sector rose 1.4%, as oil settled 0.4% higher at $80.18 a barrel after major oil consumer China posted weak but expectation-beating annual economic growth data.

Industrials ended 0.8% higher as shares of Bombardier Inc climbed 9.5%. The company raised its 2022 forecast for revenue and free cash flow above analysts' expectations, helped by robust demand for private planes.

The materials group, which includes precious and base metals miners and fertilizer companies, was a drag. It gave back some of its recent gains for a second day, falling 1.2%, as the price of gold declined.

(Reporting by Fergal Smith; Additional reporting by Shristi Achar A and Johann M Cherian in Bengaluru; Editing by Will Dunham)