Canada’s main stock index edged higher on Tuesday as technology stocks rose after slowing U.S. wage growth raised hopes that the Federal Reserve could go easy on interest rate hikes.
At 10:19 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 57.09 points, or 0.28%, at 20,629.2, on track for its best January performance since 2019.
Technology stocks were the top gainers on the index, rising 1.5% with Shopify up 2.8%.
Data showed Canada’s economy expanded slightly in November, matching estimates, and likely stalled in December, broadly in line with the Bank of Canada’s expectations for the economy to flatline during the first half of this year.
The Bank of Canada raised its overnight lending rate by an expected 25-basis-point last week, clocking a record pace of 425-basis-point of hikes in 10 months.
Meanwhile, U.S. labor costs increased at their slowest pace in a year in the fourth quarter as wage growth slowed.
“Basically, wage growth is slowing in the U.S. even though unemployment remains extremely low … it feeds into the narrative that the Fed is going slow down its pace,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.
“This is consistent with the narrative of disinflation and that stability is helping growth and tech stocks.”
Investors are awaiting monetary policy decisions from the U.S. Federal Reserve, the European Central Bank (ECB) and the Bank of England (BoE) this week for clues on the trajectory of interest rates.
Among individual stocks, Lithium Americas gained 11.3% after the miner said it would jointly invest to develop the Thacker Pass mine in Nevada along U.S. carmaker General Motors.
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