Toronto index gains 100 points, U.S. stocks mixed

TORONTO — Broad-based strength led by base metals helped Canada’s main stock index gain more than 100 points on Tuesday, while U.S. markets muddled to a mixed close ahead of highly anticipated inflation data coming this week.

Markets continued in their holding pattern ahead of an action-packed Wednesday that will see fresh data on inflation for the U.S. and an interest rate decision from the Bank of Canada.

The S&P/TSX composite index closed up 101.48 points at 22361.78.

In New York, the Dow Jones industrial average was down 9.13 points at 38883.67. The S&P 500 index was up 7.52 points at 5209.91, while the Nasdaq composite was up 52.68 points at 16306.64.

Wednesday’s U.S. consumer inflation report, plus more inflation data later in the week, will give more data points for the U.S. Federal Reserve to consider as it weighs when to start cutting its overnight rate.

“Everybody’s hanging on [the inflation report] because everybody wants to know, which way is the Fed going?” said John Zechner, chairman and lead equity manager at J. Zechner Associates.

Markets have pared back their expectations for how many times the central bank could cut this year to three, but even that may be a lofty goal, said Zechner.

“If these inflation numbers stay high, and the economy stays pretty good, you could be looking at two, one or no rate cuts,” he said.

The Fed “wants to cut,” he said, but is concerned about reigniting inflation.

The Bank of Canada isn’t expected to start cutting its rate today, said Zechner, and he doesn’t think it will shift from the hawkish rhetoric it has been giving out. Despite Canada’s economy being much weaker than the U.S., inflation is proving stubborn.

“It’s a long path back to two per cent [inflation], and it’s taking longer than maybe they expected,” Zechner said.

Rising commodity prices like energy and gold pose an additional risk to inflation, he added.

However, the strength in commodities has been helping Canadian markets “play catch-up,” he said.

On Friday, U.S. banks will kick off earnings season. Earnings expectations have come down since the start of the year, said Zechner, despite the monthslong rally in equities, so earnings season will be a “litmus test” to see whether companies can back up those gains.

The commentary from the banks on things like loan loss provisions will be important, he added.

The Canadian dollar traded for 73.65 cents US compared with

73.63 cents US on Monday.

The May crude oil contract was down $1.20 US at $85.23 US per barrel and the May natural gas contract was up three cents at $1.87 US per mmBTU.

The June gold contract was up $11.40 US at $2,362.40 US an ounce and the May copper contract was up one cent at $4.29 US a pound.

— With files from The Associated Press

Wind-powered hydrogen project in N.L. gets final approval

ST. JOHN’S, N.L. — A wind-powered hydrogen development proposed for the west coast of Newfoundland has cleared its last hurdle with the provincial government. The Newfoundland and Labrador government said Tuesday it has approved the environmental impact assessment submitted by World Energy GH2 for its plan for two 164-turbine wind farms and an ammonia production plant at Stephenville.

The company, led by Atlantic Canadian seafood mogul John Risley, says it is vying to become the country’s first commercial producer of green hydrogen and ammonia. — The Canadian Press