TSX surges 1.6% to 36,137 as metals rally; Macklem warns energy prices could force rate hike

Market action

Gold stocks led with a 3.9% gain, materials rose 3.3% and consumer staples added 2.6%; of the index's 12 subgroups, only energy moved lower (-0.5%). The TSX Venture Exchange gained 16.05 points (1.9%) to 846.38. The Canadian dollar edged up 0.12 cents to 70.48 cents US. Shopify jumped 2.9% to C$252.53, while Celestica fell 3.1% to C$446.70. On the data front, wholesale sales declined 1.6% to C$91.6 billion in August, while manufacturing sales rose 1.5%.

Central bank stance

In a speech in Halifax, Macklem said inflation is running at about 3%, the top of the Bank's 1%–3% target range, driven largely by energy, with gasoline prices up roughly 23% from a year earlier. "We don't want to raise our policy rate and restrain growth if inflationary pressures are contained. But nor do we want to be too slow to respond if inflationary pressures are becoming more persistent," he said. The policy rate stands at 2.25%. The Bank's next decision is on Oct. 28, alongside a fresh quarterly forecast. Analysts note that if oil holds near US$100 a barrel, inflation could edge higher in the coming months.

Wall Street also higher

US stocks also closed higher Thursday: the Dow Jones Industrial Average rose 556.21 points (1.1%) to 52,177.69; the S&P 500 added 25.12 points to 7,744.06; and the Nasdaq gained 20.16 points to 27,713.10, as investors rotated out of AI trades into value and digested US inflation data.