The close: Another TSX record high as China stimulus boosts commodities

Canada’s main stock index extended its record-setting run on Tuesday, led by gains for energy and metal mining shares, as major commodity importer China unveiled stimulus measures to boost its economy. The S&P 500 and Dow also ended at all-time highs.
The S&P/TSX composite index ended up 57.51 points, or 0.2%, at 23,952.22, its fourth straight day of record closing highs.
China’s stimulus package, including interest rate cuts, was broader than expected and marked the latest attempt by policymakers to restore confidence in the world’s second-largest economy.
“When China is being stimulated, that definitely helps the price of oil and many other commodities move higher,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
Taken together with the Federal Reserve cutting interest rates “you have all the makings of a good market in Canada,” Small said.
Investors expect the Fed to continue cutting interest rates over the coming months after the U.S. central bank reduced borrowing costs for the first time in four years last Wednesday.
The Bank of Canada has also been easing policy. Given the continued progress the BoC has made in bringing inflation back down to the 2% target, it’s reasonable to expect more rate cuts, Governor Tiff Macklem said on Tuesday.
The TSX materials group rose 1.8% as gold and copper prices climbed.
The price of oil settled 1.7% higher at US$71.56 a barrel on China’s stimulus measures and concerns that growing conflict in the Middle East could hit regional supply.
The TSX energy sector was up 1% and industrials added 0.3%. Heavily weighted financials were a drag, ending 0.2% lower.
Mining stocks also surged on Wall Street, where investors shrugged off weak consumer confidence data. The indexes initially trimmed gains after a report from the Conference Board revealed an unexpected decline in U.S. consumer confidence in September, driven by growing concerns about the labour market’s health.
Meanwhile, Federal Reserve Governor Michelle Bowman cautioned that key inflation measures remained “uncomfortably above” the Fed’s 2% target, warranting caution as the Fed proceeds with cutting interest rates.
The Dow Jones Industrial Average rose 83.57 points, or 0.20%, to 42,208.22, the S&P 500 gained 14.36 points, or 0.25%, to 5,732.93 and the Nasdaq Composite gained 100.25 points, or 0.56%, to 18,074.52.
Five of the 11 S&P 500 sectors traded higher, with material stocks outperforming peers with a 1.35% rise.
U.S.-listed shares of Chinese firms such as Alibaba rose 7.88%, PDD Holdings added 11.79% and Li Auto advanced 11.37%, tracking gains in the domestic market.
Megacap stocks were mixed, with Nvidia gaining 3.9%, while Microsoft lost 1.15%. The broader technology sector rose 0.79%.
The Philadelphia SE Semiconductor Index was up 1.23% as chip stocks Qualcomm and Intel rose 0.54% and 1.11%, respectively.
Among stocks, Visa lost 5.49% after the U.S. Department of Justice sued the company for alleged antitrust violations. This weighed on the financial sector which slipped 0.92%.
Advancing issues outnumbered decliners by a 1.93-to-1 ratio on the NYSE. There were 636 new highs and 43 new lows on the NYSE. The S&P 500 posted 62 new 52-week highs and no new lows while the Nasdaq Composite recorded 103 new highs and 101 new lows. Volume on U.S. exchanges was 11.42 billion shares, compared with 11.60 billion average for the full session over the last 20 trading days
Reuters, Globe staff