Canada’s main stock index rose for the third-straight session on Thursday, supported by technology and commodity-linked shares, while investors digested mixed manufacturing data.
At 10:20 a.m. ET, the Toronto Stock Exchange’s S&P/TSX was up 77.24 points, or 0.38%, touching close to six-month highs.
The energy and materials sectors rose between 0.6% and 2.3% as hopes of an OPEC+ output cut supported crude prices, while expectations of slowing U.S. interest rate hikes further added to the optimism.
The technology sector gained 1.7% as Canadian government bond yields dropped in line with a fall in U.S. Treasury yields.
Data showed Canadian manufacturing activity weakened for a fourth straight month in November as worries that the economy would slip into recession undercut demand, but the pace of contraction and a measure of inflation pressures eased.
Meanwhile, financials fell 0.4%. Canadian Imperial Bank of Commerce and Bank of Montreal shed 5.3% and 0.6% respectively, after reporting a slump in fourth-quarter profit as the lenders set aside bigger provisions to cover potential loan defaults.
Canada’s TD Bank was a bright spot, rising 1.5% on a surge in fourth-quarter profit.
“Canadian bank earnings were overall slightly worse than expected,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
“But the one thing that was consistent was that core banking held up reasonably well, while capital markets were weak which was to be expected given market conditions.”
Economists polled by Reuters expect the Bank of Canada to continue to raise rates by 25 basis points next week.
“Historically, central banks have stopped raising interest rates when they’ve at least gotten above the Consumer Price Index, and the general feeling around the Street is that rate hikes will probably stop sometime in early 2023,” Cieszynski added.
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