TORONTO — Canada's main stock index gained more than 150 points Wednesday after the Bank of Canada cut interest rates, while U.S. stock markets were mixed, led by a 1.8 per cent gain on the Nasdaq after the latest inflation report.
The Bank of Canada cut its key interest rate by half a percentage point to 3.25 per cent.
The outsized interest rate cut didn’t come as a surprise, but was welcomed by markets, said Brian Madden, chief investment officer with First Avenue Investment Counsel.
On the TSX, “the leadership seems to be a combination of rate-sensitive areas like real estate and financials, and then pro-growth cyclicals like tech, indicating the strength in the U.S.,” he said.
The S&P/TSX composite index closed up 153.37 points at 25,657.70.
“With the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected,” he said.
It was noteworthy that the Bank of Canada gave such a strong indication of what’s to come, said Madden.
In New York, the Dow Jones industrial average was down 99.27 points at 44,148.56. The S&P 500 index was up 49.28 points at 6,084.19, while the Nasdaq composite was up 347.65 points at 20,034.89.
Governor Tiff Macklem said the central bank will likely take a more cautious tack after December.
In the U.S., the latest report on consumer inflation showed price growth ticked higher in November to 2.7 per cent.
The “hotly anticipated” report came in exactly as expected, said Madden, and markets took it largely as good news.
The U.S. Federal Reserve is still “all but certain” to cut its own rate by a quarter of a percentage point next week, said Madden.
Also helping markets Wednesday were tech stocks, with Google continuing its gains from the day before after announcing its new quantum computing chip. The tech giant’s stock rose 5.5 per cent.
Another tech name in the news was Broadcom, which saw its stock rise 6.6 per cent after an announcement that it’s working with Apple to develop an AI chip, noted Madden.
Broadly, Wednesday saw a continuation of the momentum markets have enjoyed since the U.S. election, said Madden.
The Canadian dollar traded for 70.65 cents US compared with 70.59 cents US on Tuesday.
The January crude oil contract was up US$1.70 at US$70.29 per barrel and the January natural gas contract was up 22 cents at US$3.38 per mmBTU.
The February gold contract was up US$38.30 at US$2,756.70 an ounce and the March copper contract was down a penny at US$4.26 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Dec. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
