off-the-wire

TSX rises as U.S. inflation data lifts hope for more Fed rate cuts

Kitco Media
By Reuters
Published:
Updated:
Reuters
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Jan 15 (Reuters) - Canada's main stock index rose on Wednesday as investors welcomed a U.S. inflation print that lifted hopes for more rate cuts this year by the Federal Reserve.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), was up 0.76%, or 186.04 points, at 24774.62.

Eleven of thirteen sectors were trading higher, with information technology stocks leading with a 1.9% rise.

U.S. consumer prices data showed headline inflation in the world's largest economy rose marginally above forecasts in December, while the core number came in softer than expected on an annual basis.

The heavyweight financial sector (.SPTTFS), gained over 1% after strong earnings from some of Wall Street's biggest banks buoyed sentiment.

"The U.S. market is clearly what's driving global markets today, with slightly easing inflation numbers and strong bank earnings definitely benefiting the TSX," said Ian Chong, portfolio manager at First Avenue Investment Counsel.

"Strong earnings by banks in the U.S. should be positive for the Canadian banks, especially the ones with U.S. exposure."

Investors were relieved by the U.S. data as the past week saw a selloff in bond markets and weakness in global equities due to concerns that borrowing costs in the U.S. would remain elevated for longer.

Canada's benchmark 10-year bond yield eased to 3.448%, tracking lower U.S. long-term debt yields following the inflation data.

At home, data showed Canadian factory sales grew by 0.8% in November on higher sales of aerospace products and parts, as well as petroleum and coal products.

Cooler inflation in the U.K. gives sterling some stability.

However, wholesale trade fell by 0.2% in November on lower sales in the motor vehicle and motor vehicle parts and accessories subsector.

Separate data showed Canadian home sales fell in December, but were still 10% higher in the fourth quarter as the country's central bank eased borrowing costs.

Among individual stocks, BlackBerry (BB.TO), led gains in Toronto with a 4.8% rise.

Reporting by Ragini Mathur in Bengaluru; Editing by Leroy Leo

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