TORONTO — Canada's main stock index posted a small gain Wednesday as strength in energy stocks helped offset weakness in other areas, while U.S. markets rose more than one per cent.
“Today, you've got different things happening on different sides of the border,” said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management, with markets in Canada just ticking upwards while the main U.S. indexes all rose more than one per cent.
The S&P/TSX composite index was up 54.36 points at 20,296.43.
In New York, the Dow Jones industrial average was up 408.63 points at 33,420.77.The S&P 500 index was up 48.87 points at 4,158.77, while the Nasdaq composite was up 157.51 points at 12,500.57.
In the U.S., some cautious optimism helped lift equity markets after President Joe Biden said he's confident the U.S. will avoid a potentially catastrophic debt default.
“I think that gives some comfort,” said Burkett.
Also helping buoy markets in the U.S., Target reported stronger profit than expected even though it saw profits decline, helping ease some worries about how the U.S. consumer is faring, while several beleaguered bank stocks also recovered some losses from earlier in the year.
Meanwhile in Canada, markets were softer than the U.S. as they digest Tuesday’s inflation number, which ticked upwards after months of steady decline, said Burkett, marking a “major shift in momentum.”
The annual rate of inflation in April was 4.4 per cent, up from 4.3 per cent the month before.
The latest inflation release is sparking concern that the Bank of Canada took its foot off the interest-rate gas pedal too early, Burkett said.
"The story is all around inflation and interest rates here in Canada," he said.
Markets are grappling with the surprise, said Burkett, adding that it's a reminder the inflation war has not yet been won.
Burkett said while some kind of recession in Canada seems a near certainty, the question still remains as to what that recession looks like.
“A reacceleration in inflation in Canada raises the prospect that recession is a hard-landing-style recession versus the soft landing,” he said.
The Canadian dollar traded for 74.35 cents US, according to XE.com, compared with 74.32 cents US on Tuesday.
The June crude contract was up US$1.97 at US$72.83 per barrel and the June natural gas contract was down a penny at US$2.37 per mmBTU.
The June gold contract was down US$8.10 at US$1,984.90 an ounce and the July copper contract was up nine cents at US$3.75 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published May 17, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press