By Nikhil Sharma
(Reuters) -Canada’s main stock index hit a record high on Friday amid a broad-based rally, after U.S. Federal Reserve Chair Jerome Powell endorsed the likeliness of an imminent interest-rate cut.
At 10:41 a.m. ET (14:41 GMT), the S&P/TSX composite index was up 249.52 points, or 1.08%, at 23,286.99, headed for a weekly rise if gains hold.
In his speech at the Jackson Hole event, Powell said “the time has come” for the Fed to cut interest rates as rising risks to the job market left no room for weakness and inflation was within the reach of the U.S. central bank’s 2% target range.
“It looks like the tone has changed. I don’t think it’s going to go 50 basis points. My base case would probably be two cuts before the end of the year”, said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
Wall Street rallied after the policymaker’s comments, with the benchmark near a record high. [.N]
The Toronto Stock Exchange’s materials sector led broader gains with a 1.5% rise as gold prices climbed over 1% and prices also advanced. [GOL/] [MET/L]
Heavyweight sectors energy and financials advanced with a gain of more over 1% each.
Helping the rally further, yields on Canadian government bonds fell, mirroring their U.S. peers.
On the domestic data front, Canadian retail sales fell 0.3% in June from May.
Earlier this week, data showed inflation was at a 40-month low, building a case for a third consecutive cut by the Bank of Canada.
In corporate news, shares of Canadian National Railway (TSX:) rose 1.8% after the government moved to end an unprecedented rail stoppage. The union has said they would challenge the constitutionality of the decision.
Canadian Pacific (NYSE:) Kansas City shares were also up 3%, while the lockout at the railway operator has yet to be officially lifted.
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