Financials help TSX rebound, index still posts weekly decline

Financials help TSX rebound, index still posts weekly decline
Financials help TSX rebound, index still posts weekly decline/Reuters
Financials help TSX rebound, index still posts weekly decline
Financials help TSX rebound, index still posts weekly decline/Reuters

Financials help TSX rebound, index still posts weekly decline

Financials help TSX rebound, index still posts weekly decline

Financials help TSX rebound, index still posts weekly decline

May 24 (Reuters) – Canada’s main stock index rose on Friday as heavily-weighted financials led broad-based gains and after domestic inflation data this week raised expectations the Bank of Canada would soon cut interest rates.

The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE), opens new tab ended up 120.08 points, or 0.5%, at 22,320.87, rebounding after it posted on Thursday its lowest closing level in nearly three weeks. For the week, the index was down 0.6%.

Friday was the last trading day before Canada moves to shorten the trade settlement period to one day from two days, keeping it aligned with U.S. markets.

“It’s a confusing market at the moment but the bottom line is the most important number for the week was the Canadian inflation number,” said Barry Schwartz, a portfolio manager at Baskin Financial Services.

“It’s time to cut (interest) rates and that should be good for a lot of TSX laggards.”

Data on Tuesday showed Canada’s annual inflation rate fell to a three-year low of 2.7% in April, raising expectations the BoC would begin cutting rates in June.

Interest rate sensitive stocks such as financials, utilities and real estate account for 35% of the TSX, while energy, which includes high-dividend paying pipeline companies, contributes an additional 20%.

Financials (.SPTTFS), opens new tab rose 0.8% as Toronto-Dominion Bank (TD.TO), opens new tab shares recouped their previous day’s decline, rising 2.2%. The bank reported better-than-expected quarterly earnings on Thursday even as its U.S segment struggled amid probes related to its anti-money laundering program.

“Clearly regulatory issues and the fact that it won’t be allowed to grow in the U.S. for a while is not directionally positive but the results themselves were ok,” Schwartz said.

Energy (.SPTTEN), opens new tab added 0.7% as the price of oil settled 1.1% higher at $77.72 a barrel. The materials group (.GSPTTMT), opens new tab, which includes metal miners and fertilizer companies, was also up 0.7%.

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