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CANADA STOCKS-TSX adds to rally as inflation data fuels sector rotation
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CANADA STOCKS-TSX adds to rally as inflation data fuels sector rotation
Jul 16, 2024 2:26 PM

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TSX ends up 1.1% at 22,995.39

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Posts fourth straight record closing high

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Canadian inflation slows to 2.7% in June

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Tech leads gains, boosted by Shopify ( SHOP )

(Updates at market close)

By Fergal Smith

July 16 (Reuters) - Canada's main stock index extended

its record-setting advance on Tuesday, led by gains for Shopify ( SHOP )

and helped by domestic inflation data that added fuel to recent

moves into stocks that could particularly benefit from lower

interest rates.

The S&P/TSX composite index ended up 243.71

points, or 1.1%, at 22,995.39, its fifth straight day of gains

and its fourth consecutive record closing high.

"It's a continuation of the sector rotation that we saw in

earnest begin on Thursday after the U.S. CPI numbers," said

Elvis Picardo, portfolio manager at Luft Financial, iA Private

Wealth.

Investors are betting that a slowdown in U.S. inflation

could allow the Federal Reserve to cut interest rates as soon as

September.

The Bank of Canada has already begun an easing campaign.

Canadian inflation slowed to an annual rate of 2.7% in June from

2.9% in May, bolstering expectations for further rate cuts.

Investors see a roughly 90% chance of a cut at next week's

BoC policy announcement, up from 82% before the inflation

report.

"In the Canadian market, the interesting thing is that you

are seeing multiple sectors participate in this rally. The

cyclical sectors as well, even the ones that are more sensitive

to interest rates," Picardo said.

The financials sector, which accounts for 29% of the TSX's

weighting, rose 0.7%, consumer discretionary climbed nearly 2%

and real estate added 1.2%.

Technology was up 3.1%, helped by a gain of 8.5% for the

shares of e-commerce company Shopify Inc ( SHOP )> after BofA

Global Research upgraded the stock to "buy" from "neutral".

Energy was a drag, falling 1.3%, as oil settled 1.4% lower

at $80.76 a barrel, but the materials group ended 2% higher, led

by gains for metal miners as gold prices climbed.

Barrick Gold Corp ( GOLD ) was up 4.8% after the company

said second-quarter gold output rose.

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