04:27 PM EDT, 10/10/2024 (MT Newswires) -- The Toronto Stock Exchange rose to a fresh record high on Thursday, buoyed by rising commodity prices even as the financial sector was hit after TD Bank Group (TD.TO, TD) agreed to a substantial U.S. fine and limits to its growth in the country after failing to properly monitor money laundering at its operations there.

The S&P/TSX Composite Index closed up 77.36 points to close at 24,302.26, its second consecutive record close.

The biggest gainers were Energy, up 2.22%, and Base Metals, up 1.38%. Telecom and Financials were the biggest decliners, each down 0.4%.

West Texas Intermediate (WTI) crude oil closed higher on Thursday following two days of losses as worries over a spreading Middle Eastern war continue to support prices despite tepid demand. WTI crude for November delivery closed up US$2.61 to settle at US$75.85 per barrel, while December Brent crude, the global benchmark, closed up US$2.82 to US$79.40.

Gold was trading higher late afternoon on Thursday following four losing sessions even as the dollar rose after the United States reported inflation cooled last month, though not as much as expected. Gold for December delivery was last seen up US$20.70 to US$2,646.70 per ounce.

TD Bank Group (TD.TO, TD) closed down $5.35, or 6.1%, to $81.76 on Thursday as it resolved U.S. investigations related to the U.S. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs with a payment of US$3.09 billion and other measures. TD said the sum was largely covered by previous provisions of US$3.05 billion.

"By making its services convenient for criminals, it became one. Today, TD Bank became the largest bank in U.S. history to plead guilty to Bank Secrecy Act Program failures and the first bank in history to plead guilty to conspiracy to commit money laundering," U.S. Attorney General Merrick Garland said at a press conference.

Along with the payment, TD also agreed to ramp up its AML procedures, a process it said it began under a new AML leadership team in the US. It will increase staffing for AML measure and agreed to be formally monitored. The bank also agreed to limit the assets of its two U.S. bank subsidiaries to no more than the US$434 billion they held on Sept.30. The limits do not apply to TD Securities or any operations outside of the United States. The U.S. operations will also be "subject to more stringent approval processes for new bank products, services, markets, and stores to ensure the AML risk of new initiatives is appropriately considered and mitigated."

"We have taken full responsibility for the failures of our U.S. AML program and are making the investments, changes and enhancements required to deliver on our commitments. This is a difficult chapter in our bank's history. These failures took place on my watch as CEO and I apologize to all our stakeholders," Bharat Masrani, chief executive of TD Bank Group, said in a statement.

Masrani last month agreed to step down from his position in April.

For a second successive day, RBC Capital Markets said the urgency for the Bank of Canada (BoC) to front-load rate cuts and move to at least a neutral, if not accommodative, policy setting is rising. In contrast, in the U.S., RBC noted the recent employment data helps validate an important piece of RBC's more optimistic thesis over the past few months - that this 'cycle' truly is different. According to RBC, the BoC can "materially out-cut" the Fed in this cycle, which will be reflected in cross market yield performance.

This comes as the U.S. consumer price index (CPI) today rose 0.2% for the third month in a row. Excluding food and energy, core CPI was up 0.3% for the second consecutive month. The year-over-year change in total CPI slowed from 2.5% in August to 2.4% . Core inflation edged up from 3.2% in August to 3.3%.

Desjardins said: "The persistent growth seen recently in certain consumer prices, September's robust employment numbers and the relatively strong performance of other economic indicators like the ISM Services index all suggest that the Federal Reserve won't step up the pace of monetary easing. We expect it to avoid any further 50 point cuts and stick to 25 point cuts for the foreseeable future, including at its next meeting in November."

CIBC said the upside surprise in core inflation, and a likely 0.3% core PCE reading, will cement the case for a 25 basis point cut in November.

For its part, Oxford Economics noted the U.S. stock-bond correlation measured on a 100-day rolling window basis had turned negative for the first time since September last year. It said: "We expect it to stay in weak negative territory for the next six to 12 months as we enter the next phase of the monetary policy cycle, favouring portfolio diversification once again."

Oxford Economics added it expects U.S. equities to deliver positive returns., coinciding with a "challenging environment" for fixed income, as resilient growth has prompted the market to trim expectations of Fed rate cuts. "In the long-term, however, we expect the stock-bond correlation to be structurally higher due to upside risks to inflation. Investors should not expect a return to the pre-pandemic era of strongly negative correlations."