The markets today

TORONTO (CP) — Canada’s main stock index inched to within one per cent of a record high Tuesday on a broad-based rally spurred on by renewed hope of U.S. interest rate cuts and a possible trade deal between the U.S. and China. The S&P/TSX composite index closed up 149.90 points to 16,503.35 after hitting an intraday high of 16,527.28. That’s the highest closing since April 30, and 166 points off the all-time high set a week earlier than that.

In New York, the Dow Jones industrial average was up 353.01 points at 26,465.54.

The S&P 500 index was up 28.08 points at 2,917.75, while the Nasdaq composite was up 108.86 points at 7,953.88. North American markets were taking their cues from the morning comments by the European Central Bank’s Mario Draghi about the possibility of rate cuts or asset purchases. In addition, U.S. President Donald Trump tweeted that he will meet with Chinese president Xi Jingping at next week’s G20 meeting and that trade negotiations will resume, said Craig Jerusalim, portfolio manager at CIBC Asset Management. “The market got off to a good start but I think that North American markets are more squarely focused on the Fed decision tomorrow and more importantly the outlook commentary that’s going to accompany the decision,” Jerusalim said.

Observers doubt the U.S. central bank will immediately cut interest rates, but they say there’s a 95 per cent chance of such action by the end of September.

“So (Federal Reserve chairman) Jerome Powell’s commentary tomorrow will be the key factor that’s going to lead the market direction for tomorrow.” Positive comments could push the TSX and the S&P 500 to new highs.

“I think that’s a good possibility of occurring,” Jerusalim said. “The investors are shrugging off any of the warning signs such as inverted yield curve and the potential for a trade war and have bid stocks higher, largely on the hope for lower interest rates.”

All 11 of the major sectors of Canada’s main stock index ended the day higher, led by the heavyweight materials and financials sectors.

The Canadian dollar traded at an average price of 74.66 cents US, compared to an average of 74.59 cents US on Monday.