TORONTO — Canada's main stock index rose more than 100 points Thursday while U.S. stock markets climbed steadily throughout the day to post gains of more than one per cent after two pieces of positive economic news.
The main driver for markets was a surprisingly positive producer price report, said Mona Mahajan, senior investment strategist with Edward Jones.
Year-over-year PPI inflation fell significantly from 4.9 per cent in February to 2.7 per cent in March, while core year-over-year PPI was down to 3.6 per cent from 4.5 per cent.
Meanwhile, the U.S. consumer price index, which was released Wednesday, also fell but not as significantly, while core CPI ticked upward.
“I think that does support this idea that margin pressure on corporations may be starting to alleviate somewhat,” Mahajan said.
“We’ve also seen supply chain indices meaningfully moderate.”
In a one-two punch of good economic news, initial jobless claims also ticked higher, indicating some softening in the labour market, said Mahajan.
Markets are welcoming both pieces of economic data, she said.
The S&P/TSX composite index was up 110.17 points at 20,564.49.
In New York, the Dow Jones industrial average was up 383.19 points at 34,029.69. The S&P 500 index was up 54.27 points at 4,146.22, while the Nasdaq composite was up 236.93 points at 12,166.27.
Yields also moved higher, indicating a move toward risk, Mahajan said.
The Nasdaq in particular gained almost two per cent Thursday, highlighting the tech sector’s continued exposure to interest-rate expectations as well as the fact that the sector took some of the biggest hits last year, she said.
In Canada, the TSX is having a generally positive week, said Mahajan, helped by the Bank of Canada’s decision to continue holding interest rates. Bank of Canada governor Tiff Macklem has been staunch in his remarks this week that interest rates will likely remain higher for longer, in opposition with some market bets on cuts later in the year.
U.S. earnings season is starting to roll in, and the big banks reporting on Friday will give insight into how consumers are faring but also how the banking sector is doing in the aftermath of March’s crisis, said Mahajan.
Earnings estimates have come down significantly, she said, and investors — as well as the Fed — will be watching closely to see how they shake out.
“I definitely think that will be the next series of catalysts,” said Mahajan.
The Canadian dollar traded for 74.86 cents US compared with 74.37 cents US on Wednesday.
The May crude oil contract was down US$1.10 at US$82.16 per barrel and the May natural gas contract was down nine cents at US$2.01 per mmBTU.
The June gold contract was up US$30.40 at US$2,055.30 an ounce and the May copper contract was up four cents at US$4.12 a pound.
This report by The Canadian Press was first published April 13, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
