04:24 PM EDT, 10/11/2024 (MT Newswires) -- Canadian stock pickers took the Toronto Stock Exchange to yet another record close on Friday ahead of the Thanksgiving long weekend, completing a hat trick of record closes.

The S&P/TSX Composite Index closed up another 168.91 points from Thursday's prior record high, to close out the week at 24,471.17. All sectors moved higher, led by Base Metals up near 1.4%.

Friday's run up came despite mixed commodity prices and came even as Derek Holt, Vice-President and Head of Capital Markets Economics at Scotiabank, in the headline of a note he published today said: 'Markets Remain on 25-or-50 Fence from BoC After Strong Jobs, Still Elevated Inflation Expectations".

Elsewhere, National Bank in its 'Monthly Equity Monitor' for October 2024 said the S&P/TSX delivered a "stellar performance" in the third quarter in rising 9.7%, its best showing since Q1 2019, excluding the COVID-19 recession. National said: "The Canadian benchmark is benefiting from expectations of a global reflation trade, fueled by synchronized monetary easing worldwide, which could boost financials through a steeper yield curve."

For its part, National said, the resources sector is supported by the Chinese fiscal stimulus announcements and geopolitical tensions. "However," it added, "with sluggish economic growth likely to push unemployment higher in the coming months, we expect downward earnings revisions to intensify, further limiting the upside potential for Canadian equities."

On commodities, West Texas Intermediate crude oil closed lower as the market continues to await an Israeli strike on Iran while demand remains light amid rising supply. WTI crude oil for November delivery closed down $0.29 to settle at US$75.56 per barrel, while December Brent crude, the global benchmark, closed down $0.36 to US$79.04.

But gold for December delivery was last seen up $34.70 to US$2,674.00 per ounce as Oxford Economics' forecast of the U.S. personal consumption expenditures (PCE) deflators implies that while inflation is not falling as smoothly as anticipated, it still suggests inflation is "on a path, albeit bumpy", back to 2%.

"In our view, the combination of a resilient labor market and inflation receding in fits and starts is consistent with a measured pace of Fed rate cuts ahead," said Michael Pearce, Deputy US Economist at Oxford Economics, in a report. "We estimate headline PCE rose 0.18% m/m in September and the core index 0.25%, only marginally less than the gains in CPI." Its estimates imply that headline PCE inflation will fall to 2.1% in September from 2.2% and core PCE inflation to 2.6% from 2.7%.

Still on the U.S., BMO Chief Economist Douglas Porter in his latest 'Talking Points' note said the "sturdy" September employment report there "had already chilled talk of another 50 basis point Fed rate cut, but "a high-side CPI put it into the deep freeze". In fact, Porter noted, the debate now is whether the FOMC may pause for reflection in November, or December, after September's "big bazooka" move.

Porter added: "Egging on such talk is the fact that equity markets remain on a roll -- the S&P 500 was at a new high Friday morning -- and broader evidence that the U.S. economy is still chugging along, with the Atlanta Fed Nowcast currently pegging Q3 real GDP growth at a solid 3.2% pace. The combination of robust headline data, record stocks, and sticky core CPI even has some already declaring the Fed's initial 50 basis point cut was a 'mistake'."

Porter said BMO is "still quite comfortable" with its call for a steady series of 25 basis point Fed cuts over the next four meetings.

Meanwhile, Porter noted the 25 or 50 basis points cut debate "remains very much alive and well" in Canada. According to him, Friday's two key economic Canadian releases cancelled each other out, in the market's eye. The September employment report "aped" its U.S. counterpart, with a solid 46,700 job gain (including a "gaudy" 112,000 new full-time jobs) and a surprising one tick drop in the unemployment rate to 6.5%.

"Dulling the strength", Porter said, was a "curious" 0.4% drop in total hours worked, and some relief from "piping hot" wages, as average hourly wages eased to 4.6% y/y (from 5.0%). On the other hand, the Bank of Canada's Q3 Business Outlook Survey reported only modest improvement in sentiment, but a nice turndown in the inflation outlook -- with only 15% of firms now expecting inflation of more than 3% (i.e., above the target zone), compared with 54% at the end of last year. The net result of these two key reports was to leave the market almost perfectly split 50-50 on the rates debate for October.

Porter noted while the October result is in doubt, the market has zero doubt that the BoC will eventually take a bigger bite out of rates, with almost 75 bps of cuts priced in over the next two decisions. But BMO has "not yet budged off" its call for a series of 25 basis point moves for a number of reasons, including: "a lot" of evidence and anecdotal reports that the housing market is "beginning to stir"; the Canadian dollar is "suddenly careening lower again"; and energy prices are "sparking up again".

Also, Porter said: if the equity market could speak, it may well ask "what's the rush?" with rate cuts. He noted the TSX has quietly rolled 25% higher in the past year to a record high, and up 10% just since the BoC began cutting rates in early June. Porter added the U.S. economy remains sturdy, and that lessens the urgency of outsized BoC cuts.

"Having said all that," Porter concluded, "we readily recognize that inflation is back at target, the economy is operating below capacity, confidence is sour, and the Bank seems to have a dovish bent. If the market is handing the BoC an opportunity to cut by 50 bps on a silver platter, it's tough to see them saying No thanks."