Canadian Stocks Advance Amid Easing Oil Prices, Rising Fed Rate Hike Concerns

(RTTNews) - Partially reversing the losses from the four previous sessions, Canadian stocks moved higher on Friday as reports indicating an upcoming meeting between Iran and the Gulf Cooperation Council members to de-escalate gulf tensions sparked expectations of an earlier reopening of the Strait of Hormuz.

After opening higher than yesterday's close, today the benchmark S&P/TSX Composite Index traded positive throughout the session before settling at 35,697.49, up by 191.21 points (or 0.54%).

Seven of the 11 sectors posted gains today, with the IT sector leading the pack.

After the collapse of the June 17 Memorandum of Understanding signed between the U.S. and Iran, the U.S. pressured Iran to reopen the Strait of Hormuz by enforcing an economic blockade and sanctions.

After Iran targeted vessels transiting the Strait of Hormuz, U.S. forces attacked Iranian military installations. In response, Iran launched strikes on the U.S. bases in the gulf.

Amid these attacks and counter-attacks, the Strait of Hormuz remained closed, and shipping traffic across the strait reduced to single digits. As a result, crude oil prices skyrocketed, leading to inflationary pressures.

Easing concerns today, citing familiar sources, the Financial Times reported that the foreign ministers of Iran and the six-member Gulf Cooperation Council are slated to meet on Monday. Arranged by Oman, the meeting is intended to find ways to immediately reopen the Strait of Hormuz.

All the GCC members being oil producers are suffering economically due to their disability to export their production. In addition, these countries were targets of retaliatory attacks by Iran. Hence, experts are of the view that the GCC nations could possibly find ways for an early resumption of oil transit.

As a result, crude oil prices tumbled today, lowering inflation concerns and stock markets received a boost.

In the U.S., the U.S. Bureau of Labor Statistics data showed that on a month-on-month basis, the Consumer Price Index increased 0.4% in August. On an year-on-year basis, the CPI steadied at 3.4% in August. Both readings came in line with expectations.

The core Consumer Price Index (which excludes food and energy) increased by 0.3% over a month in August. On a year-on-year basis, the core consumer prices eased to 2.4% in August, aligning with forecasts.

Economists are of the view that today's inflation numbers coupled with yesterday's stronger-than-expected August Producer Price Index make a good case for the U.S. Federal Reserve to hike interest rates.

Investors have increased their bets on a 25-basis-point hike by the U.S. Federal Reserve next week to 86.50%, according to the CME Group's FedWatch Tool.

Traders are also assessing the fallout of tit-for-tariff imposition by Canada and the U.S.

Since August 22, the 50% tariffs imposed by the U.S. on Canada came into effect, impacting roughly $20 billion worth of Canadian goods.

The Canadian retaliatory tariffs matching the U.S. duties dollar-for-dollar took effect on September 8.

Again, as a counter-response, Trump announced banning several Canadian products outright, including alcoholic beverages, dairy goods, and motorcycles from September 29.

With another executive order, Trump levied 50% tariffs on multiple Canadian imports into the U.S. These duties will hit Canada from September 15.

According to new estimates from the Canadian Federation of Independent Business, more than 53,000 Canadian small and medium-sized businesses are directly caught in the crossfire of the trade war.

Major sectors that gained in today's trading were IT (3.59%), Materials (1.07%), Real Estate (0.91%), Industrials (0.71%), Financials (0.60%), and Communication Services (0.40%).

Among the individual stocks, Boyd Group Services Inc (10.51%), Descartes Sys (6.87%), Celestica Inc (6.64%), Tecsys Inc (6.55%), Enghouse Systems Limited (5.88%), Wesdome Gold Mines Ltd (4.59%), and Altius Minerals Corporation (3.40%) were the prominent gainers.

Major sectors that lost in today's trading were Healthcare (1.47%), Energy (0.68%), Utilities (0.48%), Consumer Staples (0.25%), Consumer Discretionary (0.24%), and Communication Services (0.40%).

Among the individual stocks, Bausch Health Companies Inc (3.80%), International Petroleum Corporation (3.00%), Spartan Delta Corp (2.46%), Tamarack Valley Energy Ltd (1.99%), Algonquin Power and Utilities Corp (2.13%), and Empire Company Limited (1.64%) were the notable losers.