Bill Gross warns on gold momentum as regional bank stocks tumble
Investing.com - Canada’s main stock exchange was higher on Monday after the average notched another fresh record high to close out the prior trading week.
The S&P/TSX composite index gained 190 or 0.64% at 29,958.98
Index increased by 1.1% to end at 29,768.36 on Friday, eclipsing a previous all-time peak.
On a weekly basis, the average jumped by 1.7%, notching a seventh-consecutive weekly gain -- the longest streak since February 2024.
Underpinning sentiment was decision earlier in the week by the Bank of Canada to cut interest rates, which was interpreted as an indication that inflation in the country may be on a downward trajectory and policymakers are shifting towards supporting economic growth.
A surge in the price of gold to record highs also boosted the materials sectors, including shares of metal mining groups, most notably Barrick Mining Corporation. The gold and copper producer’s stock soared by 9.7%.
U.S. stocks gains
U.S. stock index gained amid optimism over interest rate cuts by the Federal Reserve pushed Wall Street to record highs last week, with a series of Fed official set to speak.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average rose 66 points, or 0.1%, the S&P 500 index climbed 9.5%, hitting a record high of 6,692.59, and the NASDAQ Composite added 0.7%.
The main averages on Wall Street logged a second straight day of record closing highs on Friday, while trading volume jumped to its highest level since April. The benchmark S&P 500 and tech-heavy Nasdaq Composited posted a third consecutive weekly gain, buoyed in large part by the Federal Reserve’s decision to slash interest rates by 25 basis points and signal that more reductions could be coming in the months ahead.
Fed speakers, inflation data in focus
The Fed rate cut last week and the accompanying comments from Chair Fed Powell mean that markets are now pricing in two more quarter-point cuts between now and the end of the year, according to the CME FedWatch Tool.
With this in mind, investors are likely to focus this week on speeches from a host of Fed officials, most notably Chair Jerome Powell on Tuesday, as they seek more clues on future monetary policy.
Powell has tended to emphasise a largely data-driven approach to future easing.
With this in mind, there are also a host of key U.S. economic readings due this week. These include purchasing managers index data for September, a final reading of second-quarter gross domestic product growth, and, most importantly, PCE price index data -– an inflation gauge closely watched by the Fed -– at the end of the week.
Core PCE inflation is expected to remain largely above the Fed’s 2% annual target, while the focus will be on any signs of higher inflation from increased trade tariffs.
Gold hits new record high
Gold prices touched a new record peak, as the prospect of more U.S. interest rate cuts after the Fed’s recent borrowing cost drawdown supported the outlook for bullion.
Spot gold rose 1.1% to $3,726.13 an ounce, while gold futures rose 1.5% to $3,760.65/oz.
Lower rates bode well for non-yielding assets such as the yellow metal, given that they lower the opportunity cost of investing in the sector. Broader metal prices have also advanced after the Fed’s cut.
Oil dips
Oil prices fell, handing back earlier gains that resulted from rising geopolitical tension in the Middle East as well as the potential impact of fresh European Union measures aimed at curbing Russia’s energy revenues.
Brent futures slipped 0.5% to $66.32 a barrel, and U.S. West Texas Intermediate crude futures fell 0.6% to $62.04 a barrel.
The weekend’s news that four Western nations have recognised Palestinian state has added to jitters in the Middle East, a key oil-producing region.
Additionally, the European Commission on Friday proposed its 19th package of sanctions against Russia, which would impose penalties on traders, refineries, and petrochemical firms in third countries, including China, that breach existing rules on Russian energy imports.