TSX index rises with potential end to U.S. government shutdown in focus

Investing.com - Canada’s main stock exchange index rose on Wednesday, a day after the average edged up thanks to gains in energy, industrials and financials.

By 11:52 ET (11:52 GMT), the S&P/TSX 60 index contract had risen by 1%.

On Tuesday, the S&P/TSX composite index climbed by 0.31% to 30,409.25, shaking off declines in sectors like utilities and technology.

Despite receiving a boost from an uptick in commodity prices and a breakthrough in talks to end a prolonged U.S. government shutdown, analysts quoted by Reuters said that further catalysts are needed for the index to continue marching higher.

U.S. futures inch up

U.S. stock futures ticked higher as investors awaited the confirmation of a deal to end the longest-ever federal government shutdown.

At 06:32 ET, Dow Jones Futures gained 58 points, or 0.1%, S&P 500 Futures climbed 17 points, or 0.3%, and Nasdaq 100 Futures rose 116 points, or 0.5%.

The main averages on Wall Street ended in mixed fashion on Tuesday, as investors weighed the likely reopening of the U.S. government with disappointing weekly jobless claims data from payroll services firm ADP, which signaled a downturn in labor market momentum.

The broad-based S&P 500 rose 0.2% and the blue chip Dow Jones Industrial Average gained 1.2%, while the tech heavy NASDAQ Composite dropped nearly 0.3%.

Government reopening to see data releases

Lawmakers in the U.S. House of Representatives are likely to vote this week on a compromise which would end an historically-long government shutdown.

Hopes that the government will soon reopen were bolstered earlier this week, when the U.S. Senate approved a bill to secure federal funding for most agencies until January 30.

The bill will now head to the House of Representatives, where the body’s Republican majority means the body is likely to approve the bill, before President Donald Trump signs it into law.

For financial markets, reopening the government would mean the return of several official economic indicators, including a monthly jobs report, which have been delayed by the shutdown. These data points are crucial because they help investors and policymakers alike assess the state of the U.S. economy.

The data blackout has made the path ahead for Federal Reserve interest rates particularly murky, leaving the outcome of the central bank’s final monetary policy meeting in December largely uncertain.

According to the Wall Street Journal, Fed members remain divided on whether to cut rates at the gathering, after having slashed borrowing costs by 25 points at prior two meetings in October and September.

Markets are pricing in a 61.9% chance for a 25 basis point cut in the Fed’s December 10-11 meeting, up from 57.8% yesterday, CME FedWatch Tool showed.

Cisco due to report

On the earnings calendar, markets will be keeping close tabs on results from networking gear provider Cisco Systems after the closing bell.

Cisco has faced a solid backdrop in recent months, underpinned by the surge in enthusiasm for AI, which has fueled soaring hyperscale cloud investments and driven IT infrastructure financing.

Elsewhere, Oklo stock edged higher even after its third-quarter loss widened from a year ago, as the nuclear power startup works toward getting regulatory approval for its technology.

Chevron will also be in the spotlight, with the oil major set to reveal its latest strategy update later in the session following a massive $55 billion acquisition of smaller peer Hess.

Crude retreats

Oil prices retreated, handing back the previous session’s gains brought about by expectations that an end to the longest-ever U.S. government shutdown could boost demand in the world’s biggest crude-consuming nation.

Brent futures dropped 3.7% to $62.77 a barrel, and U.S. West Texas Intermediate crude futures fell 4% to $58.58 a barrel.

Both contracts posted gains of at least 1.5% on Tuesday as traders hoped that the likely end to the U.S. government shutdown would lead to a rebound in travel ahead of the upcoming holiday season.

Gold steadies

Gold prices have rallied on Wednesday, as investors assessed cues around the end to U.S. government shutdown.

Doubts over the Federal Reserve’s plans to cut interest rates further also weighed on gold, as the dollar found its footing. Markets were also watching the Supreme Court’s scrutinizing of Trump’s sweeping trade tariffs, although a ruling appears unlikely in the near-term.

Spot gold gained 1.6% to $4,196.00 an ounce, while gold futures for December rose 2% to $4,200.82/oz.