(Reuters) – Futures tied to Canada’s main stock index edged higher on Monday ahead of the U.S. Federal Reserve’s monetary policy decision later in the week, with investors anticipating a steeper interest rate cut.
Futures on the S&P/TSX index were up 0.1% at 6:01 a.m. ET (10:01 GMT).
Odds of a hefty 50-basis points cut in key interest rate at the end of the Fed’s two-day meeting on Wednesday have risen to 59% from 30% last week, according to CME’s FedWatch tool.
Meanwhile, Bank of Canada Governor Tiff Macklem has opened the door to stepping up the pace of interest rate cuts, the Financial Times reported on Sunday. He told the newspaper that rate-setters were concerned about Canada’s labor market and the possibility of lower oil prices hitting the economy.
The materials sector was set to benefit as gold prices touched record highs due to a softer dollar and rate-cut expectations. On the flip side, copper prices nursed declines. [GOL/] [MET/L]
The composite index hit its second consecutive record high on Friday as investors perked up on the possibility of the rate cut.
Washington is Canada’s biggest trading partner and a larger U.S. rate cut could also benefit the country’s resource-heavy stock market.
Canada’s energy sector was set to remain in focus as oil prices jumped amid expectations of the rate cut. [O/R]
On the data front, markets will monitor manufacturing sales numbers expected at 8:30 a.m. ET.
Focus will also be on key consumer prices data, as well as producer prices and retail sales numbers due later in the week.
In corporate news, Air Canada on Sunday reached a tentative last-minute deal with its pilots’ union over a new four-year collective agreement, ending a stand-off over pay and benefits and averting a near-term strike or lockout.
COMMODITIES
Gold: $2,586.13; +0.37% [GOL/]
US crude: $69.15; +0.7% [O/R]
Brent crude: $72; +0.5% [O/R]
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($1 = 1.3579 Canadian dollars)
(Reporting by Nikhil Sharma; Editing by Leroy Leo)
