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Canadian Market Futures Rise Amid Speculation of U.S. Fed Rate Cuts and Anticipation of Inflation Data

At Traders on Trend, we’re observing a dynamic shift in the financial landscape as Canadian stock market futures experienced a notable uptick early Tuesday. This surge in the S&P/TSX index futures, recorded at 0.4% around 7:13 a.m. ET, mirrors a broader optimism in the market. This optimism is rooted in speculations that the U.S. Federal Reserve might initiate interest rate reductions in the coming year. Meanwhile, the U.S. market futures are similarly showing a slight increase.

Investor attention is currently centered on the upcoming release of Canadian consumer price data. Scheduled for 8:30 a.m. ET, this report is anticipated to reveal a headline inflation rate of 2.9% for November, a slight decrease from the previous month’s 3.1%. This data could influence future financial decisions, particularly regarding interest rates.

The Governor of the Bank of Canada, as reported by BNN Television, hinted that interest rate cuts could be a possibility in the near future, contingent on the trajectory of core inflation rates. In the U.S., San Francisco Federal Reserve President Mary Daly, as per a Wall Street Journal report, suggested that rate cuts by the U.S. central bank might be on the horizon in 2024.

Contrastingly, the Bank of Japan has decided to maintain its current ultra-loose monetary policies, a move that was largely anticipated by market analysts.

The Toronto Stock Exchange’s S&P/TSX composite index closed on a high note in the last session, bolstered significantly by gains in the energy sector. In the commodities market, crude oil prices have remained relatively stable. However, there’s a notable upward trend in most base metal prices, while gold prices have remained somewhat unchanged.

In corporate news, several Canadian oil and gas producers have expressed reluctance to expedite emission reduction efforts. This hesitation stems from uncertainty regarding the political future of Prime Minister Justin Trudeau and his proposed policies on oil and gas emissions caps.

On the stock-specific front, Imperial Oil has projected a rise in upstream production for 2024, surpassing its forecast for 2023. In the automotive sector, brokerage CIBC has adjusted its ratings for several companies. Magna International has been downgraded to “neutral” from “outperformer,” while Boyd Group Services has been upgraded to “outperformer” from “neutral.”

As of 7:13 a.m. ET, commodity prices stand as follows: Gold futures are stable at $2,031; U.S. crude oil is slightly down by 0.1% at $72.4 per barrel; and Brent crude has also decreased by 0.1%, pricing at $77.84 per barrel.

Exchange rate: 1 USD equals 1.3383 CAD.

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