Toronto market rebounds on broad-based gains

Canada’s main stock index edged higher on Monday, boosted by gains in consumer staples and financials stocks, as the market recovered from the previous week’s broad selloff triggered by hotter-than-expected U.S. inflation data.

By mid-morning, the Toronto Stock Exchange’s S&P/TSX composite index was up 40.09 points, or 0.18 per cent, at 21,940.08.

Heavyweight financials stocks gained 0.6 per cent, while consumer staples rose 1.0 per cent.

Communication services shares rose 0.4 per cent. The sector was pulled up by Cogeco Communications, that rose 0.6 per cent after brokerage RBC raised its price target on the company following its firstquarter results.

Only three sectors out of 11 were recording losses. Energy stocks declined by 0.8 per cent, tracking a drop in oil prices.

“We are seeing a bit of a rebound, based on strong economic data (retail sales in the U.S.) and hopes for a de-escalation of Middle East tensions,” said Angelo Kourkafas, senior investment strategist at Edward Jones Investments.

In the U.S., retail sales increased more than expected in March, providing further evidence that the economy ended the first quarter on solid ground.

“The ongoing economic strength suggests that the Fed is not in a rush to cut rates, but on the flip side, corporate profits will continue to be supported that can extend the expansion of the bull market,” he added.

Investor focus will shift to the March reading of the crucial consumer prices index in Canada, due today, to gauge inflation in the economy and adjust expectations of an interest rate cut by the Bank of Canada.

The dataset is in the limelight after Bank of Canada governor Tiff Macklem hinted at the central bank’s last decision that it could be open to a June cut if the recent cooling trend in inflation was sustained.