Positive report boosts markets

Photo: The Canadian Press

TORONTO — Strength in energy and utilities helped Canada’s main stock index post a modest gain Thursday, while U.S. markets also moved higher following a stronger-than-expected GDP report.

The U.S. economy grew 3.3% in the last quarter of 2023, as consumers remained resilient despite higher interest rates.

The S&P/TSX composite index closed up 75.76 points at 21,101.54.

In New York, the Dow Jones industrial average was up 242.74 points at 38,049.13. The S&P 500 index was up 25.61 points at 4,894.16, while the Nasdaq composite was up 28.58 points at 15,510.50.

The GDP report was stronger than expected, though decelerating from the previous quarter, Madden said.

“It bolsters the case for a soft landing in the U.S.,” said Brian Madden, chief investment officer with First Avenue Investment Counsel.

Economic data, including the core personal consumption expenditures index that was in line with expectations Thursday, continues to paint a picture of that unicorn scenario, Madden said.

“The other thing the markets are clamouring for as much so, if not more so, than the soft landing is quick and substantial interest rate cuts from the (U.S. Federal Reserve),” he said.

Those are unlikely to come this month, he noted. Despite Thursday’s report, they remain a “coin toss” for the March meeting.

“Ordinarily, you would think that a strong GDP print would sort of dampen the enthusiasm for rate cuts. But … people are bidding up bonds, despite the strong economic output in the GDP report,” Madden said.

“So you’re sort of getting the best of both worlds: faster growth, and you’re getting people bidding the bond curve, meaning they’re still kind of pining for and expecting pricing rate cuts this year.”

The Canadian dollar traded for 74.22 cents US, according to XE.com, compared with 74.16 cents US on Wednesday.