Canadian Stocks Soar Amid Easing Oil Transit, CPI Data

(RTTNews) - Rebounding after three consecutive sessions of decline, Canadian stocks surged on Monday amid signs of easing of the oil blockade in the gulf while CPI data indicated cooling inflation.

After opening just above the previous week's close, today the benchmark S&P/TSX Composite Index gathered momentum to trade firmly positive through the session before settling at 32,876.65, up by 334.72 points (or 1.03%).

All the 11 sectors posted gains today, with consumer staples leading the pack.

The gulf war that started on February 28, clamped oil transit via the Strait of Hormuz due to concerns of vessels getting attacked.

The blockade showed signs of easing after India negotiated to successfully get clearance for six vessels to pass through safely.

An oil tanker and two LPG vessels linked to Pakistan were also allowed to cross the chokepoint over the weekend. The U.S. also allowed Iranian tankers to transit.

As these developments indicated that the closure of Strait of Hormuz would be lifted soon, oil and energy supply disruption concerns diminished today.

Along with that, investor confidence renewed after softer inflation numbers from February pushed up the index higher.

Data released by Statistics Canada revealed that the year-on-year inflation rate (Consumer Price Index) fell to 1.80% in February from 2.30% in the previous month, while month-on-month inflation increased 0.50% in February.

Canada's annual core inflation (excluding eight volatile components including food, energy, and mortgage interest costs) fell to a 11-month low of 2.30% in February from 2.60% in January while month-on-month it rose 0.40% from the previous month.

CPI Trimmed-Mean (a measure of core inflation) decreased to 2.30% in February from 2.40% in January.

Cooling inflation help bank stocks, and domestically reduces the strain on Canadian household budgets.

However, last week's labor market data showed that far below the forecast of modest job gain, Canada lost around 83,900 jobs in February with unemployment rate rising to 6.70%. Of note, there was a substantial decline in full-time positions.

Today, the data released by Canada Mortgage And Housing Corporation revealed that housing starts in Canada increased 4.50% in February to a seasonally adjusted annual rate of 250,900 units, below market expectations.

The delay in an end to the Middle East war has compounded fears of long-term inflation on the economy, and as a result, economists are of the view that the Bank of Canada would keep its policy rate at the current 2.25% range in its upcoming monetary policy meeting on March 18.

Yesterday, the Canadian Prime Minister Mark Carney concluded his visit in Norway after meeting Prime Minister Jonas Gahr Store along with the leaders of Denmark, Iceland, Sweden, and Finland to discuss about expanding trade and investment ties and to unite and cooperate on common security and prosperity.

Carney has arrived in London to meet and discuss with the Prime Minister of U.K. Keir Starmer various bilateral issues including the impact of closure of the Strait of Hormuz in the Arabian gulf due to the ongoing war and the resultant surge in crude oil prices.

The Canada-United States-Mexico Agreement on trade (or CUSMA) has been insulating Canada and Mexico from the U.S.-imposed tariffs on exports to the U.S.

The pact is coming up for renewal in a few months. However, the U.S. administration has propagated uncertainty about its future, with U.S. President Donald Trump hinting at quitting the agreement altogether.

Canadian investors are closely watching the discussions between Canada and the U.S. for any breakthrough development.

Major sectors that gained in today's trading were Consumer Staples (1.80%), Consumer Discretionary (1.67%), Financials (1.63%), IT (1.45%), and Real Estate (1.12%).

Among the individual stocks, Empire Company Limited (2.85%), Premium Brands Holdings Corporation (2.55%), Aritzia Inc (3.65%), and Fairfax Financial Holdings Ltd (3.63%) were the prominent gainers.

Altus Group Limited (9.26%), Lundin Gold Inc (5.48%), and Nfi Group Inc (5.37%) were among the prime market-moving stocks today.