(RTTNews) – Canadian stocks jumped on Monday as the threat of a partial U.S. government shutdown along with increasing expectations of a U.S. Federal Reserve rate cut increased gold prices and lifted commodity stocks.
After opening well above the previous week’s close, the benchmark S&P/TSX Composite Index gained momentum to trade firmly positive throughout the trading session and reach an intraday high of 29,980.48 before closing to finally settle at 29,971.91, up by 210.63 points (or 0.71%).
10 of the 11 sectors posted gains today with the healthcare sector leading the pack leaving the energy sector the only loser.
Starting October 1, the U.S. government may go into a partial shutdown as Democrats and Republicans are locking horns over allowing temporary funding required to run the machinery.
U.S. President Donald Trump is meeting top Democratic and Republican leaders today to avert a government shutdown. A failure of talks could result in crippling essential services to citizens across the nation.
Trump wants to first pass a temporary bill extending the funding and discuss healthcare issues later. On the other hand, Democrats are insisting on extending the Affordable Care Act subsidies that support keeping healthcare costs within reach for nearly 24 million Americans as part of the bill.
Stakes run high with $1.7 trillion in discretionary spending due to lapse. A shutdown could also delay publication of this months’ payrolls report and a slew of other important data.
This deadlock helped gold prices on the upside and Canadian commodity stocks, specific to yellow metal, rose.
In the U.S., the core PCE price index number released last Friday revealed a 0.23% rise in August. On a 12-month basis, the Fed’s key core inflation rate ticked up to 2.91% from 2.85%.
Despite, the Fed’s inflation target being 2%, the readings have bolstered the expectations of traders on further rate cuts by the U.S. Fed in October and in December.
Last week, Trump announced new tariffs on heavy trucks, patented drugs, and furniture coming into the U.S. These levies, which have added more uncertainty to the already cloudy global economic scene, are set to take effect from Wednesday.
The U.S. has hit Canada with 35% tariffs on a majority of its exports to the U.S. These tariffs have dented the steel, aluminum, and auto sectors.
Canada’s Prime Minister Mark Carney is working hard to mend ties with Canada’s two major trading partners, the U.S. and China. Canada-U.S. trade negotiations have so far not yielded any tangible results.
The Canadian government is now planning to review its immigration strategy to attract and absorb people who miss out getting H-1B visas on account of the recent executive order signed by Trump imposing $100,000 fees on new H-1Bs.
On the economic front, it was an uneventful day for Canada with no significant releases.
Major sectors that gained in today’s trading were Healthcare (7.60%), IT (2.76%), Materials (1.13%), and Consumer Staples (1.12%).
Among the individual stocks, Bitfarms Ltd (10.39%), Shopify Inc (6.17%), Dye & Durham Ltd (4.39%), First Quantum Minerals Ltd (8.38%), Seabridge Gold Inc (7.82%), and Hudbay Minerals Inc (7.35%). were the prominent gainers.
Energy (1.48%) sector was the sole loser in today’s trading.
Among the individual stocks, Vermillion Energy Inc (5.01%), Baytex Energy Corp (3.97%), International Premium Corp (3.65%), Parex Resources Inc (2.99%), and Cenvous Energy Inc (2.83%) were the notable losers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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