Canada’s main stock index was set for a second consecutive week of declines after TSX fell on Friday, led by losses in energy shares, while expectations rose that the U.S. Federal Reserve will hold back on any further interest rate hikes as inflation cools down.
The index was down for the eighth consecutive session at its lowest since October 22.
Energy sector was the top loser, falling 1.1% despite oil prices rising 1% a barrel on Friday.
The materials sector, which includes precious and base metals miners and fertilizer companies, climbed 0.4% as gold prices held steady, supported by continued demand for safe havens fuelled by Middle East tensions.
Higher copper prices also added to the gains in materials shares with upbeat signs of recovery in top metals consumer China.
U.S. data on Friday showed personal consumption expenditures (PCE) price index, considered the Fed’s preferred inflation gauge, gained 0.4% in September, mirroring its margin in August.
In the 12 months through September, the PCE price index advanced 3.4%, matching August’s rise.
“The Federal Reserve is highly likely to pause interest rate hikes next week given the directional slowing of PCE inflation,” said Brian Pietrangelo, managing director of investment strategy, Key Private Bank.
“Investors should view this pace of declines in inflation as generally positive and remain cautiously optimistic that inflation will abate going forward,” Pietrangelo added.
Traders are now pricing in about a 25% chance the Fed will raise its benchmark interest rate by a quarter of a percent in its meeting in January, compared with 29% chance earlier, according to CME’s FedWatch Tool.
Nasdaq and S&P 500 also rose after the PCE data and the robust forecasts from Amazon.com and Intel.
On the companies front, shares of Imperial Oil slid 1.1% after it posted a sharp drop in its third-quarter profits, hurt by lower commodity prices.
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