CANADIAN EQUITIES – Easing inflation helps lift Toronto market to 2-month high


TSX closes 0.7% higher at 20,376.57


Most closed publications since May 15


Annual inflation in Canada falls to its lowest level in 27 months


Materials and Energy Push TSX Higher

(Updated at market close)

By Fergal Smith

July 18 (Reuters) – Toronto’s main stock index hit a two-month high on Tuesday, driven by gains in resources and financials stocks, as a slowdown in Canadian inflation to below 3% boosted investor sentiment.

The Toronto Stock Exchange’s S&P/TSX Composite Index ended up 149.78 points, or 0.7%, at 20,376.57, its highest closing level since May 15.

“He’s benefiting from a shift in sentiment,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. “Certainly today’s news of lower-than-expected inflation has bolstered optimism.”

Canada’s annual inflation rate fell more than expected to a 27-month low of 2.8% in June, falling below the top of the Bank of Canada’s 1% to 3% control range for the first time since March 2021, helped by lower energy prices.

US inflation has also slowed. This could lead the Federal Reserve to suspend its interest rate hike campaign after an expected tightening later this month, which could improve the outlook for the global economy.

“If there’s more expectation that the global economy can pull off some sort of soft landing…then the TSX should benefit from that sentiment,” Picardo said.

The Toronto market is heavily weighted in sectors that are sensitive to the global economic outlook, including energy and materials.

Energy rose 2.7%, with oil up 2.2% at $75.75 a barrel, while the materials group, which includes precious and base metal mines and fertilizer companies, gained 1.9%.

Financials rose 0.8% as major U.S. banks said higher interest rates helped boost profits in the second quarter. (Reporting by Fergal Smith in Toronto and Siddarth S in Bengaluru; Editing by Shweta Agarwal, Krishna Chandra Eluri and Sandra Maler)

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