TSX Takes Gains For 2023 So Far To Near 800 Pts As Commodities Rise and Inflation Seems To Have Peaked

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Canada’s main stock market, the Toronto Stock Exchange, on Thursday closed up 186 points, taking the overall index to over the 20,200 level. It added to the near 600 points the resources heavy exchange gained over the first seven sessions of this year, helped by recent strength in commodities and more signs of a peak in inflation.

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The U.S. December CPI data which was released earlier today showed the inflation rose at a 6.5% annualized pace in December, matching expectations and down from 7.1% a month earlier. The latest annualized print marks the sixth straight month of cooling price pressures.

Sal Guatieri, Senior Economist at BMO Economics, said “another relatively mild inflation report” from the U.S. was welcome news and could tip the odds toward the Fed dialing down the pace of rate hikes to 25 bps at the next meeting.

For Guarieri, the bottom line is two out of three of Fed Chair Powell’s key inflation categories (core goods, shelter, and core services ex-shelter) are now moving in the right direction, down. “And it’s only a matter of time before the shelter component rolls over.” he said, before adding: “Three months of relatively lighter core inflation figures is starting to form a trend…one that could spur the Fed to slow the pace of tightening further on February 1.”

Among commodities today, gold closed with a strong gain today as the dollar and bond yields dropped with the US inflation data showing signs of moderation in December, easing pressure on the Federal Reserve to raise interest rates, but failed to hold above the US$1,900 mark. Gold for February delivery closed up $19.90 to $1,898.80 per ounce, after touching US$1,906.50 during the session.

WTI crude oil rose for a sixth-straight session on Thursday as inflation in the U.S. moderated last month, pushing the dollar lower, while demand from China is on the rise. WTI crude for February delivery closed up $0.98 to settle at US$78.39 per barrel. March Brent crude, the global benchmark, was last seen up $1.55 to US$84.22, while Western Canada Select was up $1.14 to US$53.79 per barrel.