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TSX ends higher as PCE data keeps alive bets of Fed rate cuts in H1 2024

Published 2024-02-29, 02:46 p/m
Updated 2024-02-29, 05:01 p/m
© Reuters. — Canada's main stock index, the S&P/TSX Composite index, ended higher by more than a 100 points on the day, tracking Wall Street’s main indices higher as U.S. PCE data came in cooler than expected. On Wall Street, both the S&P 500 and the Nasdaq composite notched new record highs.

The personal consumption expenditures (PCE) price index in the United States rose 0.3% in January, keeping hope alive that the U.S. Federal Reserve may still cut rates in the first half of 2024.

Canadian GDP data meanwhile came in stronger than expected, implying that the Bank of Canada may still have room to keep rates on hold in April.

Data from Statistics Canada showed that the Canadian economy expanded at an annualized rate of 1.0% in the fourth quarter, exceeding expectations for a or an expansion of 0.8% growth.

January GDP likely gained 0.4% from December, StatsCan flash estimate showed.

Despite coming in higher than expected, Canadian economic growth remains far from robust.

Growth appears to have been driven largely by an easing of previous supply constraints... rather than necessarily an improvement in domestic demand," said Andrew Grantham, economist with CIBC (TSX:CM).

Doug Porter, chief economist at BMO (TSX:BMO) (TSX:BMO) Capital Markets notes that "It's not as if the economy is sinking... It's just very slowly but surely moving ahead." The implication for the Bank of Canada meanwhile is “that there's no urgency to cut rates," Porter notes.

On the corporate front, TD (TSX:TD) and CIBC reported earnings and closed out Canada’s big 6 bank earnings. Both banks beat expectations on profit, although both reported earnings that fell from the same quarter in the year earlier.

All Canadian big banks saw credit loss provision rise as lenders put aside more money for bad loans.

The biggest gainers of the session on the S&P/TSX Composite were Lithium Americas (TSX:LAAC) Corp (TSX:LAC), which rose 15.66% or 1.01 points to trade at 7.46 at the close. OceanaGold Corporation (TSX:OGC) added 7.14% or 0.15 points to end at 2.25 and Osisko Gold Ro (TSX:OR) was up 6.10% or 1.14 points to 19.82 in late trade.

Biggest losers included EQB Inc (TSX:EQB), which lost 9.17% or 8.70 points to trade at 86.18 in late trade. Kinaxis Inc (TSX:KXS) declined 8.87% or 13.70 points to end at 140.68 and Baytex Energy Corp (TSX:BTE) shed 8.07% or 0.38 points to 4.33.

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