Canadian Stocks Jump Amid Rising Expectations Of Fed Rate Cut

(RTTNews) - Canadian stocks climbed sharply on Tuesday as expectations of a U.S. Federal Reserve rate cut gains more traction as investors parse the latest U.S. economic data.

After opening just above yesterday's close, the benchmark S&P/TSX Composite Index gained momentum early in the session and traded positively throughout the day before settling at 30,900.65, up by 296.30 points (or 0.97%).

Ten of the 11 sectors posted gains today, with the Consumer Staples sector leading the pack.

Today in the U.S., the Bureau of Labor Statistics data revealed that producer prices rose by 0.3% in September - matching forecasts - after edging down by 0.1% in August. On an year-on-year basis, the producer prices increased 2.70% in September.

Month-on-month core producer prices (which exclude food and energy) edged up by 0.1%.

In addition, the retail sales crept up 0.2% month-over-month in September following a 0.6% increase in August.

These numbers indicate a stable inflationary environment despite the ongoing tariff war and recent government shutdown.

Correlating these numbers with the recent jobs data, market expectations of a rate cut by the U.S. Federal Reserve are increasing.

CME Group's FedWatch Tool is currently indicating investors are betting at an 82.7% chance (up from around 50% a week before) of a 25-basis-point rate cut by the Fed at its December 9-10 meeting.

Data from Statistics Canada revealed that the wholesale sales are expected to edge down 0.1% month-over-month in October after rising 0.6% in September. This advance estimate comes in the wake of low sales in the food, beverage and tobacco subsector as well as in the agricultural supplies industry group.

In its October Monetary Policy Report, the Bank of Canada had stated that it expects fourth-quarter Gross Domestic Product to expand at an annualized rate of 1%.

A private economic analysis by JPMorgan Chase & Co. indicates that the third-quarter growth could turn out lower because of slowing personal consumption and "weakness" in fixed investments.

Last month, U.S. President Donald Trump halted trade talks between Canada and the U.S. These stalled talks are yet to resume thereby piling up the economic pressure on Canada.

At the recently concluded G-20 summit, Canadian Prime Minister Mark Carney stated that he does not currently have any burning issue to discuss with the U.S. and that he will resume talks "when the U.S. is ready."

Carney is pushing to expand trade relations with Asia, Europe, and Africa. His government is planning to double exports by 2035 while encouraging Canadians to buy Canadian goods only.

Meanwhile, Ukraine has reportedly agreed to a new 10-point peace plan proposed by the U.S. to end the Russia-Ukraine war.

Markets welcomed this development expecting that an end to the conflict would facilitate a revival in the global economy.

Major sectors that gained in today's trading were Consumer Staples (2.61%), Consumer Discretionary (2.23%), Industrials (1.61%), and IT (1.21%).

Among the individual stocks, Alimentation Couche-Tard Inc (4.91%), Premium Brands Holdings Corp (4.80%), Empire Company Ltd (2.41%), Brp Inc (7.95%), and Tecsys Inc (3.13%) were the prominent gainers.

Only Energy (0.59%) sector lost in today's trading.

Among the individual stocks, Kelt Exploration Ltd (5.81%), Parex Resources Inc (4.53%), Tamarack Valley Energy Ltd (3.35%), Arc Resources Ltd (3.04%), and Vermillion Energy Inc (2.88%) were the notable losers.

Denison Mines Corp (6.36%) and Novagold Res Inc (5.85%) were among the prime market-moving stocks today.