TSX Stability Amid Investor Caution; Natural Resource Stocks Lead Gains

The main Canadian stock index remained flat on Monday, with gains in the materials and energy sectors, driven by rising commodity prices, offset by investor caution ahead of key US inflation data and the Federal Reserve policy meeting later this week. At 10:02 am ET (2:02 pm GMT), the S&P/TSX Composite Index on the Toronto Stock Exchange was down 7.17 points, or 0.03%, at 21,999.83. The Canadian dollar weakened, while the yield on 10-year government bonds rose to 3.518%. The yield on similar US benchmark debt also increased due to concerns that persistent inflation will keep interest rates higher for longer in the United States. Investors took a cautious stance ahead of US consumer price data released on Wednesday and the Fed’s policy meeting, which could influence market action and determine the timing and extent of the country’s monetary policy easing this year. US stock indices also edged lower as a precaution. Utility and financial services stocks, sensitive to interest rates, slipped 0.2% and 0.3%, respectively, on the Toronto Stock Exchange. Meanwhile, data on Canadian manufacturing sales and wholesale trade for April is expected to be released on Friday. While the Bank of Canada (BoC) has already started easing its monetary policy by cutting rates by 25 basis points last week, investors are betting on a near 51% probability that the Fed will begin cutting rates in September. “With interest rates still at restrictive levels, the Bank of Canada can still lower its rates without causing a resurgence in price growth,” said Nathan Janzen, deputy chief economist at Royal Bank of Canada, in a note. The energy sector gained 1.3%, leading sectoral gains as crude prices rose, supported by hopes of increased fuel demand this summer. The materials sector, which includes metal miners and fertilizer companies, followed with a 0.5% increase, supported by higher prices for most metals, including gold and copper. As for companies, bitcoin miner Bitfarms fell 1.5% after approving the adoption of a “poison pill” to ward off a potential hostile takeover attempt by rival Riot Platforms (reported by Khushi Singh in Bengaluru; edited by Shreya Biswas).