Canada’s main stock index edged higher on Tuesday, as benign U.S. inflation data reinforced expectations for an interest-rate cut by the country’s Federal Reserve in September.
At 09:50 a.m. ET (1350 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 0.26% at 27,847.43 points and was trading near record levels.
The communications sector led the advances on TSX by rising 1.24%, followed by a 0.8% rise in healthcare.
A Labor Department report showed U.S. consumer prices rose 0.2% in July after a 0.3% gain in June. On a year-over-year basis, CPI advanced 2.7%, slightly below the 2.8% forecast from economists polled by Reuters.
The data maintained the case for a Fed rate cut next month, according to traders’ bets in futures markets.
“Inflation is on the rise, but it didn’t increase as much as some people feared,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
“In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table.”
An additional boost came from seemingly subsiding trade tension between the world’s top two economies. U.S. President Donald Trump extended a tariff truce with China to November 10, averting triple-digit duties on Chinese goods.
Canada’s materials index added 0.5%, thanks to rising copper prices due to the China tariff deadline extension.
However, the trade tension between China and Canada showed no signs of easing. Beijing announced a preliminary anti-dumping duty on Canadian canola imports, a fresh escalation in a year-long trade dispute that began with Ottawa’s imposition of tariffs on Chinese electric vehicle imports last August.
In other stocks, Gildan Activewear fell more than 9% after the Financial Times reported that the apparel manufacturer is nearing an about $5 billion deal to acquire Hanesbrands, including debt.
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