Cheaper oil lifted the S&P/TSX Composite on Monday through the Bank of Canada, not through energy. The index closed at 35,801.09, up 181.06 points or 0.51%, while the energy subgroup fell 4.4%.
Gold, Real Estate and Materials Led While Energy Paid
Gold gained 2.9%, real estate 2.8% and materials 2.5%, and all but two of the 12 TSX subgroups rose, Baystreet.ca reported. Energy fell 4.4% and information technology fell 1%. Investing.com and RTTNews both attributed the advance to easing inflation worries after the drop in oil.
That reading fits the central bank. The Bank of Canada raised its policy rate 25 basis points to 2.5% on October 28, its first hike since July 2023, and named energy prices as the central concern, CP24 reported. Brent crude fell 7.6% to a settlement of US$104.77 on Monday, which removes part of the premium behind that concern.
Gold, real estate and materials rose while oil and energy fell, with the broad index sitting between the two groups.
Brent is the January contract settlement and WTI is measured from the Friday settlement of US$104.12. Seven TSX subgroups that rose without a published figure are omitted.
The Barrel Fell but the Premise of the Hike Did Not
Brent still settled above US$100, and ANZ and UBS hold year-end forecasts of US$105 and US$110, OilPrice.com reported. The Bank of Canada said 60% of consumer-facing businesses it surveyed expect to pass on higher costs within 12 months, and that energy costs have not yet spread widely. One session of lower crude changes neither fact.
The two-year Government of Canada yield was 3.283% at 8:50 a.m., 78 basis points above the 2.5% policy rate and 15.8 basis points below its October 28 peak of 3.441%. On that day investors put a 45% chance on another hike in December, according to Reuters. The December 9 decision therefore still turns on whether pass-through appears in the data.
A harder U.S. line after the midterm elections on Tuesday is the scenario that reverses the move, with Tim Waterer of KCM Trade placing Brent near US$120 in that case.
The Late Fade Tracked Wall Street, Not Oil
The TSX stood 332.75 points higher at 11:43 a.m. and closed 181.06 points higher, giving back 46% of that gain. Over the same period West Texas crude moved from a 6.7% decline at 11:39 a.m. to a 7.4% decline at settlement, a change of 0.7 percentage points while the index gain shrank by almost half.
The U.S. tape reversed over the same hours. The S&P 500 was up 1% and the Nasdaq Composite up 1.3% at 10:42 a.m., and they closed down 0.51% at 7,541.40 and down 1.07% at 25,164.32, CNBC reported.
The TSX closed at 35,801.09, below its 11:43 a.m. level of 35,952.78 and 1.4% under its October 21 closing high of 36,324.99.
The October 21 closing high is the highest close in the period shown. The 11:43 a.m. level is an intraday reading, not a close.
The morning established that metals and rate-sensitive groups were recovering the loss of 629.00 points on Friday, and the 11:39 a.m. reading showed 51% regained. The close records 29%. For Friday-to-Monday comparisons, 29% is the figure, and the final hours show that Canadian gains depend on the U.S. tape as well as on commodities.