S&P/TSX composite makes modest gain Monday, U.S. markets closed for long weekend

The S&P/TSX composite index closed up 47.64 points at 19,967.95.

Canada’s main stock index ticked upwards Monday, with broad-based gains led by battery metals and energy stock as U.S. markets were closed for a long weekend south of the border.

The S&P/TSX composite index closed up 47.64 points at 19,967.95. The gains came with U.S. stock markets closed for the Memorial Day holiday.

Canadian markets typically take their direction from U.S. markets, so absent major news for investors to react to, it was a quiet day on the TSX, said Lesley Marks, chief investment officer of equity at Mackenzie Investments.

However, on Tuesday U.S. investors will have a tentative debt-ceiling deal to retroactively react to after weeks of negotiations. On the weekend, President Joe Biden and House Speaker Kevin McCarthy struck an agreement to avoid a government default.

“Markets were positive heading into the weekend,” noted Marks, on rumours that a deal was closed, though she thinks that the achievement of a deal was to be expected. While the deal still has legislative hurdles to clear, she said investors are likely relieved to move on from the uncertainty the debt-ceiling talks brought to the markets, distracting from other important themes.

The big question mark hanging over markets is still whether the Federal Reserve will hike or pause interest rates at its mid-June meeting, said Marks.

Market expectations have bifurcated as to what the central bank will do, she said — while chairman Jerome Powell has indicated that a pause could be coming if the data supports it, some of the more recent economic data releases have made investors uncertain as to whether the bank will take that route.

Meanwhile, continued resiliency in the economy, especially in the labour market, has market expectations of rate cuts in 2023 dwindling, said Marks.