Midday: TSX rises as earnings rise following strong bank results

Canada’s main stock index rose on Thursday led by the financial sector, which gained on upbeat quarterly results from industry giants, while slowing U.S. economic growth in the first quarter lifted market sentiment.

At 11:12 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index rose 177.81 points, or 0.81%, to 22,075.79, marking its best day in more than three weeks.

Financial highlights gained 1.4%, leading growth across the sector.

EQB Inc was the top performer on the financial index, rising 7.7% as the bank topped its first-quarter revenue estimates.

Royal Bank of Canada added 4% after beating analyst estimates for quarterly profit, thanks to strength in its capital markets business and core personal banking segment.

Canada’s Imperial Bank of Commerce also beat earnings expectations based on capital market strength, rising 3.8%.

The energy sector gained 1.1% despite falling oil prices, while the materials sector gained 0.8% due to a slight increase in gold prices. The only decliner was the information technology index, which lost 0.6% after Descartes Systems fell 5.2% lower on the TSX index following quarterly results.

Meanwhile, data showed the U.S. economy grew slower than previously estimated in the first quarter after adjustments to consumer spending, giving the Fed more incentive to start cutting interest rates sooner.

Investors are now focused on upcoming U.S. inflation data, as well as Canadian GDP data for March and the first quarter, which is due on Friday.

A Reuters poll of economists showed the Bank of Canada will cut interest rates to 4.75% at its June 5 monetary policy meeting and will make three more cuts this year.

“Canada’s economic backdrop continues to improve on a per capita basis, with unemployment rising and wage and inflation pressures showing further signs of easing,” economists at the Royal Bank of Canada said.

On Thursday, global stock indices fell and bond yields fell along with the dollar after weaker-than-expected macroeconomic data from the US.

The U.S. economy grew slower than expected in the first quarter after downward revisions to consumer spending, according to a Commerce Department report that showed gross domestic product (GDP) grew at an annual rate of 1.3% compared with estimates at 1.6% and 3.4%. pace in the fourth quarter.

The U.S. dollar index fell in the wake of the data after hitting a two-week high the previous day, while Thursday’s decline in U.S. Treasury yields follows two consecutive days of gains fueled by weak government debt auctions.

“The decline in yields reflects the reality of a slowing economy,” said Jamie Cox, managing partner of Harris Financial Group. “The market is trying to get ahead of exchequer reimbursement, but the data shows the reality.”

Cox also pointed to Salesforce Inc’s earnings report, which sent its shares down more than 20% and weighed heavily on the technology sector, which was the biggest drag on the S&P 500.

On Wall Street at 10:51 a.m. (1451 GMT), the Dow Jones Industrial Average fell 386.44 points, or 1.01%, to 38,055.10, the S&P 500 fell 25.26 points, or 0.48% , reaching 5,241.69, and the Nasdaq Composite fell 111.82 points, or 0.65%, to 16,810.46.

The MSCI gauge of global stocks fell 2.21 points, or 0.28%, to 781.95.

In Europe, the STOXX 600 index rose 0.56% after falling sharply on Wednesday when data showed German inflation rose slightly more than forecast in May. In Europe, investors are waiting for the key inflation reading for the euro zone, which is due on Friday.

Investors were also eagerly awaiting the week’s main event – Friday’s April report on the U.S. Personal Consumer Expenditures (PCE) Core Price Index, the Federal Reserve’s preferred measure of inflation.

In the case of treasury bonds, yields fell after data that maintained the Fed’s expectations of starting interest rate cuts this year.

The benchmark 10-year U.S. bond yield fell 6.2 basis points to 4.562%, while the 2-year bond yield, which typically moves in line with interest rate expectations, fell 5.2 basis points to 4.9331%.

The closely watched part of the U.S. Treasury yield curve measuring the difference between two- and 10-year Treasury yields, seen as an indicator of economic expectations, was -37.3 basis points.

On the currency front, the dollar index, which measures the dollar against a basket of currencies including the yen and euro, fell 0.45% to 104.66, while the euro rose 0.38% to $1.0841. Against the Japanese yen, the dollar weakened by 0.65% to 156.58.

In the energy sector, oil prices fell after the GDP data and before the data on oil stocks.

U.S. crude fell 0.63% to $78.7 a barrel and Brent fell to $82.86 a barrel, down 0.89% on the day.

Spot gold gained 0.26% to $2,344.74 an ounce as dollar and bond yields fell.

– Reuters

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