TSX Rises as Mining Shares Lend Support

Canada's main stock index, the S&P/TSX composite, experienced a notable rise on Monday, driven primarily by gains in mining shares that tracked higher gold prices. This uptick comes ahead of crucial domestic inflation data and the anticipated earnings report from leading chipmaker Nvidia later this week.

Key Takeaways

• The S&P/TSX composite index rose by 106.73 points, or 0.43%, reaching 24,997.41.
• The materials sector saw a significant increase of 2.6%, fueled by a rebound in gold prices.
• The energy sector also advanced by 0.7%, influenced by rising oil prices amid escalating tensions in Eastern Europe.
• Canadian housing starts rose by 8% in October, indicating a robust construction sector.
• Investors are closely watching the upcoming consumer price index data, which could impact the Bank of Canada's monetary policy.

Mining Shares Drive Market Gains

The materials sector was the standout performer on the TSX, with a 2.6% increase as gold prices rebounded against a weaker U.S. dollar. This recovery in gold prices followed a six-session losing streak, providing much-needed support to the index.

Leading the charge in the mining sector were:

• Orla Mining: Up 8.5%
• IAMGOLD: Up 7%
• OceanaGold: Up 6.2%

Shiraz Ahmed, a senior portfolio manager at Raymond James, noted, "Gold is performing strongly, and with the Canadian economy being heavily resource-driven, it's providing a boost to the TSX today."

Energy Sector Also Sees Gains

The energy sector contributed to the overall positive performance of the TSX, advancing by 0.7%. This increase was largely attributed to rising oil prices, which were influenced by the intensifying conflict between Russia and Ukraine over the weekend. The geopolitical tensions have historically led to fluctuations in oil prices, and this instance was no different.

Housing Market Shows Strength

In addition to the stock market's performance, the Canadian housing market showed signs of strength, with housing starts rising by 8% in October compared to the previous month. This increase was driven by a surge in groundbreaking for both multi-unit and single-family detached homes, indicating a robust demand in the housing sector.

Upcoming Economic Indicators

As investors look ahead, the focus is on the consumer price index (CPI) data set to be released on Tuesday. This data will provide insights into inflation trends and could influence the Bank of Canada's policy decisions in its upcoming December meeting. Following a recent cut in the benchmark interest rate by 50 basis points, there is speculation about the possibility of another significant cut, with current market bets standing at 34.8% for an additional 50-bps reduction.

Wall Street Mixed Ahead of Nvidia Earnings

While the TSX saw gains, Wall Street's main indexes were mixed on Monday as investors awaited Nvidia's quarterly results. The chipmaker's third-quarter earnings report, scheduled for Wednesday, is expected to be a significant market mover, particularly for AI-linked stocks that have been on a prolonged rally.

Brookfield's Acquisition Plans

In corporate news, Canadian investment firm Brookfield is reportedly planning to offer approximately 7 billion euros ($7.4 billion) for Spanish drugmaker Grifols, following the completion of due diligence. However, Brookfield's shares dipped by 0.5% on Monday amid these developments.

Overall, the TSX's rise reflects a combination of strong performances in the mining and energy sectors, alongside positive indicators from the housing market, setting the stage for a potentially impactful week ahead in Canadian finance and economics.

Sources

• TSX rises as mining shares lend support, Yahoo.