04:27 PM EDT, 08/19/2024 (MT Newswires) -- The Toronto Stock Exchange closed at its highest ever on Monday, rising for an eighth-straight session on expectations the Federal Reserve is readying interest-rate cuts and hopes for further cuts in Canada ahead of July Canadian inflation data coming on Tuesday.

The S&P/TSX Composite Index closed up 61.78 points to close at 23,116.78, topping the prior record, set at the end of July, of 23,110.81. Base Metals, up 1.6%, and Battery Metals, up 0.5%, led the market higher, while . Energy and Health Care were the biggest decliners, down 0.5% and 0.08% respectively.

Monday's record comes ahead of fresh Canadian inflation data for July coming tomorrow from Statistics Canada. RBC Economics is above consensus expecting a 0.6% m/m headline gain, with the consensus expecting an 0.4% monthly rise, leaving the annualized measure steady at 2.7% against the 2.5% consensus.

RBC noted core inflation measures have printed stronger in the past two months compared to the previous four. The consensus estimate expects a 2.6% rate for core-CPI and a 0.2% monthly rise. The three-month rolling average for BoC's preferred Trim and Median measures are likely to tick higher as the lower monthly increase in April rolls out of the calculation.

RBC said to meaningfully lower its probability for two more successive rate cuts, it would need to see an "alarmingly" high report, as much as 3.0% annualized for a headline monthly rise of 0.4%, as the Bank's focus has shifted towards growth and the output gap as said in their recent dovish communications.

In contrast, S&P Global Ratings expects that CPI will have edged down to 2.6% in July with CPI-trim falling to 2.8%. S&P forecasts for CPI-trim implies the three-month annualized inflation has bounced back up above the BoC's 1%-3% target range. According to S&P, it increases the chances of a hold on policy rates in September, a risk to its baseline assumption of another 25-bps rate cut next month.

Looking ahead, S&P said given soft real spending growth and labor market, the BoC is likely to maintain its dovish stance. It continues to expect the BoC to cut rates further by 25 bps each in the upcoming September and October meetings.

Derek Holt, Vice-President and Head of Capital Markets Economics at Scotiabank, estimates a 0.5% monthly non-seasonally adjusted rise and slight downtick to 2.6%. However, Holt said, after two months of re-acceleration, the key will be whether July data shows a third month of upside pressure in monthly SAAR measures of trimmed mean and weighted median CPI occurs.

"That is impossible to estimate in advance given the limited data and high sensitivity of the readings to the distribution of price changes. The reading probably matters little to the BoC that appears intent on delivering meaningful easing before potentially reassessing."

Gold traded at a record high mid-afternoon on Monday the dollar fell to the lowest in more than seven month ahead of a U.S. interest rate cut expected next month and treasury yields were mixed ahead of the Federal Reserve's annual conference this week. Gold for December delivery was last seen up US$5.70 to US$2,543.50 per ounce, rising off Friday's record close of US$2,537.80.

West Texas Intermediate (WTI) crude oil fell for a second day on continuing worries over the health of China demand, though geopolitical concerns offered support. WTI crude for September delivery closed down US$2.28 to settle at US$74.37 per barrel, while October Brent crude, the global benchmark, closed down US$2.02 to US$77.66.