Canada's main stock index edged slightly higher to a new record close Monday, helped by commodity price gains that lifted the energy and mining sectors.
The S&P/TSX composite index inched up 18.22 points from Thursday's previous record high to close at 22,185.25.
U.S. markets, which also enjoyed record-setting runs in March, were mixed. In New York, the Dow Jones industrial average was down 240.52 points at 39,566.85 on Monday. The S&P 500 index was down 10.58 points at 5,243.77, while the Nasdaq composite was up 17.37 points at 16,396.83.
From a Canadian perspective, the TSX's heavy exposure to energy and mining stocks means the index got a lift from Monday's commodities prices, said Stephen Duench, vice-president and portfolio manager at AGF Investments Inc.
Gold hit an all-time intra-day high of $2,262.19 in Monday's session, while crude oil has been trending higher since the end of January. The S&P/TSX capped energy index gained 1.18 per cent on the day, while the capped materials index (made up of mining-based stocks) gained 1.51 per cent.
"What we're seeing today has been an extension of what we witnessed in March, where a lot of the commodity complex is doing much better in the last few weeks," Duench said.
"We've been seeing the positive commodity performance over the last few weeks, and that really benefits our home market, Canada, for obvious reasons — like sector exposure."
Commodities are gaining as investors become increasingly confident that the economy is resilient, even as inflation is milder than it was at its peak two years ago.
On Wall Street and Bay Street, the hope is that the economy remains strong enough to drive corporate profits higher, but not so hot that central banks — in particular, the U.S. Federal Reserve — need to keep interest rates higher for longer to rein it in.
"You've seen the last few weeks where you've had commodities doing better, you've had the TSX doing a lot better in March," Duench said.
"I think as we start to be able to point to a potential 'Goldilocks' or 'soft landing' scenario, that definitely these trends could continue — and we are seeing that today."
South of the border, however, a note of uncertainty entered the equation with the release of a surprisingly strong report on U.S. manufacturing which cast doubts on how much interest rates can ease this year.
The Institute for Supply Management report showed U.S. manufacturing unexpectedly returned to growth last month, snapping a 16-month run of contraction. Following the manufacturing data release, traders on Wall Street briefly trimmed bets on the first cut to rates coming as soon as June.
But Duench said June was never a foregone conclusion, and added if the Fed doesn't cut rates then it still might cut in July.
"I think investors are really kind of playing push-pull in terms of their expectations on whether it's going to be a June or July cut," he said.
"Is it that significant of an issue if they don't cut in June and if they delay to July? That's really going to be the main question as we progress through the second quarter."
He added markets may get a better sense of central bankers' thinking later this week, when several significant economic reports are slated to be released, including Friday's anticipated U.S. jobs numbers report.
The Canadian dollar traded for 73.67 cents US compared with 73.80 cents US on Thursday.
The May crude oil contract was up 54 cents at US$83.71 per barrel and the May natural gas contract was up eight cents at US$1.84 per mmBTU.
The June gold contract was up US$18.70 at US$2,257.10 an ounce and the May copper contract was up four cents at US$4.05 a pound.
This report by The Canadian Press was first published April 1, 2024
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Amanda Stephenson, The Canadian Press
