TSX climbs to record peak on Fed rate cut hopes
At 9:50 a.m. ET (1350 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 0.39% at 28,028.83 points.
The move builds on the benchmark index's record close on Tuesday after the July CPI report from the U.S. suggested a limited impact of tariffs on prices and reinforced bets for the Federal Reserve rate cut in September.
Traders have fully priced in a September rate cut and view at least two reductions by the end of 2025, according to the CME Group's FedWatch tool.
'People are focusing more on things like the U.S. interest rate cuts, Trump and Putin meeting on Friday, the U.S. either resolving or delaying some of their tariff threats,' said Colin Cieszynski, chief market strategist at SIA Wealth Management.
'We're seeing equity markets continue to do well, people remain confident the economy has held up, and inflation has not taken off as much as people thought.'
TSX's consumer discretionary led the sectoral gains with a 1.7% jump, boosted by Gildan Activewear surging 12%, after the apparel manufacturer agreed to buy U.S. undergarments maker Hanesbrands for $2.2 billion.
Materials climbed 0.7%, thanks to elevated gold and copper prices on the back of U.S. policy easing optimism.
A solid earnings season, reduced trade tensions and expectations of policy easing have pulled global equities up from the April lows triggered by Trump's 'Liberation Day' tariffs.
TSX is up over 13% this year, outperforming Wall Street's S&P 500's 10% rise.
Markets are also bracing for a high-stakes meeting between U.S. President Donald Trump and Russian President Vladimir Putin on Friday to discuss a potential end to the war in Ukraine.
At 13:30 ET, the Bank of Canada will release a summary of the monetary policy deliberations that went behind its July interest rate decision, when it kept rates unchanged.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
Hot US data knocks LatAm currencies
BRASILIA: Most Latin American currencies slipped on Thursday, with Mexico's peso leading the downfall, after data showing a stronger than expected rise in US producer prices cooled near-certain bets on a Federal Reserve rate cut next month. An index tracking Latin American currencies slipped 0.4%, while a similar gauge for the region's stocks fell 0.79%. US PPI jumped 3.3% in July, data showed, topping the 2.5% Reuters consensus. Traders quickly scrapped budding bets on a half-point Fed cut next month, but still pencil in a quarter-point move, with odds at 94%, down from about 99%, according to CME's FedWatch tool. 'The large spike in PPI shows inflation is coursing through the economy, even if it hasn't been felt by consumers yet,' said Chris Zaccarelli, chief investment officer for Northlight Asset Management. 'Given how benign the CPI numbers were, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a 'guaranteed' rate cut next month.' Mexico's peso slid nearly 1% to a one-week low, while the country's benchmark index lost 0.5%. Chile's peso was down 0.8%, while stocks in Santiago eased from a record high touched in the previous session. The Brazilian real slipped 0.29%, while the country's stock index lost 0.2%. Fresh data showed services activity in Brazil grew 2.8% in June on an annual basis. The Argentine peso firmed 0.46%, but stocks in Buenos Aires slid to a more than two-week low, down 2.2%, a day after July inflation rose a modest 1.9% - in line with forecasts - as the once triple-digit annual rate hit its lowest since 2020. Reining in inflation remains central to President Javier Milei's strategy ahead of October's elections. Colombian stocks were the only major regional equities in positive territory, inching up 0.41%. Peruvian stocks held steady ahead of the country's interest rate decision. Meanwhile in Asia, India's bond yields logged their steepest decline in three months after S&P Global Ratings upgraded the country's long-term sovereign credit rating to 'BBB' from 'BBB-'. The wider emerging markets backdrop may hinge on US President Donald Trump and Russia's Vladimir Putin's summit. Trump threatened 'severe consequences' if Putin balks at a Ukraine deal, then floated a fast follow-up with Zelenskiy, softening worries about Kyiv being sidelined in Alaska. 'The developments on Ukraine-Russia war negotiations are important for overall global risk,' said Jon Harrison, managing director of emerging market macro strategy at TS Lombard. While Ukraine's international dollar bonds rose 1 cent, stocks of bordering nations fell, with Poland's set for their steepest daily fall in two weeks, while Romanian equities were set for their biggest intraday fall in more than a month.
Business Recorder
an hour ago
- Business Recorder
Wall St slips as rate-cut bets waver on hot producer inflation data
NEW YORK: Wall Street's main indexes declined on Thursday, after a hotter-than-expected producer prices report dampened investor expectations of potential interest-rate cuts by the Federal Reserve this year. A Labor Department report showed producer prices increased by the most in three years in July due to a surge in the costs of goods and services, suggesting a broad pickup in inflation was imminent. Traders trimmed their Fed rate-cut expectations for the rest of the year to about 56.7 basis points, according to data compiled by LSEG, compared with around 63 bps before the report. But they are still fully pricing in a quarter-percentage-point cut in September. 'The implication is that the Fed is going to offer a 25-bit cut in September. But it will be a hawkish cut. It's way too early still for the Fed to wish to guide the market towards an extended easing cycle,' said Thierry Wizman, global FX and rates strategist at Macquarie Group. 'The next important thing will be the Expenditures Price Index later this month. If there are signals that there's inflation broadly in services, the market will take that adversely.' A separate report on Thursday showed the number of Americans filing new applications for jobless benefits fell last week. At 11:55 a.m. ET, the Dow Jones Industrial Average fell 163.83 points, or 0.36%, to 44,758.44, the S&P 500 lost 9.96 points, or 0.16%, to 6,456.62 and the Nasdaq Composite lost 26.59 points, or 0.12%, to 21,686.56. Recent data reflecting labor market weakness and a moderate rise in consumer prices had strengthened expectations that the central bank will potentially lower interest rates next month. However, Thursday's report fanned concerns that US tariffs on imports could start to impact prices in the coming months and dampen a rally in US stocks that had helped the benchmark S&P 500 and tech-heavy Nasdaq log record highs over the past two sessions. On Thursday, eight of the 11 S&P 500 sectors declined, with materials falling the most, down 1.3%. Rate-sensitive small-caps and housing stocks also dropped more than 1% each. Fed President Alberto Musalem, a voting member on the Federal Open Market Committee this year, said a half-point rate cut at the Fed's September meeting is not warranted, a day after Treasury Secretary Scott Bessent said it was possible. Cisco Systems lost 1.4% after the network equipment manufacturer's broadly in-line forecast did little to encourage investors. Declining issues outnumbered advancers by a 3.86-to-1 ratio on the NYSE and by a 3.14-to-1 ratio on the Nasdaq. The S&P 500 posted 12 new 52-week highs and one new low while the Nasdaq Composite recorded 57 new highs and 55 new lows.
Business Recorder
2 hours ago
- Business Recorder
‘Hybrid' narrative
EDITORIAL: The stakeholders' narrative gaining traction on airwaves and the print media is that the hybrid system, rooted in ground realities, has made significant strides in all areas of governance — particularly foreign relations and the economy. Pakistan's relations with the West have improved markedly, however, it would be folly to deny the considerable influence of the Trump administration's deviations from previous US-led policies (fully supported by the European Union) that are attributable to the US President's entirely different policy thrust with respect to dealing with Russia and China, continuing to be joined at the hip with the genocidal policies of Israel, and, last but not least, the primacy of tariffs in forging trade deals with countries around the world. In this context President Trump's success in forging a ceasefire between India and Pakistan (subsequent to our indisputable win over the skies) and his lunch invitation to COAS Field Marshal Asim Munir, much to the chagrin of Indians, are certainly foreign policy coups that must be appreciated. Prime Minister Shehbaz Sharif's nomination of President Trump for the coveted peace prize no doubt generated goodwill in the White House though the sentiment in this country was dampened after the Israeli Prime Minister Netanyahu nominated President Trump for the same prize. These improved ties have not been at the cost of our long-term friends — China, Saudi Arabia and the United Arab Emirates — with reports suggesting that China had extended tacit support to our foreign policy initiatives. However, one would hope that the Foreign Office had duly deliberated on the Armenia-Azerbaijan peace deal signed in Washington DC, before announcing support. The Zangezur Corridor, a 43-kilometre road from Azerbaijan to Nakhchivan Autonomous Republic through Armenia, has been given to the US on a 99-year lease. This would link Azerbaijan to Turkey and beyond to Europe — a move opposed by Iran as it has been credibly reported that some Israeli strikes on Iran were from Azeri territory, and by Russia that fears that US control of the corridor may compromise its influence in the south Caucasus with the possibility of becoming a geopolitical and possibly military hotspot like Ukraine. On the economic front, however, the narrative remains under challenge on three counts. First, while the trade deal with the US reduced the threatened 29 percent tariffs on our exports to 19 percent yet the claim that we are at the most advantageous position in our region has little traction as no other country has yet agreed to US tariffs and the two major regional countries — China and India — unlike the European Union continue to resist succumbing to US demands that they have stated are unfair and unjustified. Second, foreign direct investment (FDI) pledged by the US in the trade deal has yet to bear fruit, and additionally two years after the establishment of the Special Investment Facilitation Council (SIFC) FDI has remained elusive with the latest data uploaded on the Finance Division website was USD 1.8 billion in July-June 2025 against USD 1.96 billion in the comparable period the year before. Portfolio investment suffered negative USD 650.9 million outflows in 2025 as opposed to negative USD 383.8 million in the comparable period the year before. In other words, more work is required to make a success of the SIFC, which allows for one forum where all possible impediments to FDI can and are being resolved. In addition, the reliance on rollovers has not yet abated with USD 16 billion in the current year with the foreign exchange reserves lower at USD 14.5 billion. The overarching focus of the economic team leaders is on a massive reduction in inflation and a current account deficit that is under control; however, what is being ignored is the rise in poverty levels in the country, 44.2 percent as per the World Bank, and an untenable unemployment rate of 22 percent, indicators that may well have the seeds of socio-economic unrest that, as per the IMF, could well derail the ongoing programme's reform efforts. The IMF programme conditions accepted by the economic team continue to be under implementation which are neither pro-poor nor pro-growth — as they are severely contractionary and include: (i) monetary policy — the decline in the discount rate from 21 to 11 percent maybe significant but no economist will define 11 percent as not being severely contractionary; and (ii) fiscal policy with the existing indirect taxes raised and/or widened to generate revenue rather than to reform the tax structure by reducing reliance on indirect taxes whose incidence on the poor is greater than on the rich. In-house out of the box policies are required to ease the rising pressure on the pressure cooker of public opinion. Copyright Business Recorder, 2025
