04:17 PM EDT, 05/03/2024 (MT Newswires) -- Canada's main stock market, the Toronto Stock Exchange, made it three wins in a row to start the month of May in gaining 124 points to near the 21,950 level on Friday -- matching total gains made over the two prior sessions -- as the prospects for near term Bank of Canada rate cuts appear to have been reignited.

Most sectors were higher, with the biggest gainers being Base Metals (+2.29%) and Utilities (+1.1%). The only decliners on the day were Battery Metals, down -0.69% and Energy, down -0.21%.

The Financial sector was up despite TD Bank (TD.TO, TD) losing nearly 6% as National Bank assessed a "more severe 'worst-case' scenario" tied to TD's U.S. regulatory issues.

Also, likely capping gains today, MarketWatch noted oil futures finished lower -- saying "with easing concerns over potential supply disruptions in the Middle East, strong U.S. production and signs of slowing demand prompting prices to register their largest weekly percentage loss since early February". It noted traders tied an early Friday rise in oil prices to a news report that some OPEC+ members would be willing to extend production cuts beyond the end of the second quarter.

Meanwhile, the COMEX gold contract was down, but was cutting its losses as the afternoon went on, and at last look was in and around the US$2,300 mark, according to the BNN Bloomberg website.

In terms of rates here, Douglas Porter at BMO Economics in his weekly 'Daily Points' note noted that following a "surprisingly hearty" start to 2024, Canadian growth has reverted to form, with GDP in the first two months of the year revised lower and March coming in flat. He noted that while the preliminary estimate for Q1 growth was, thus, pegged at 2.5% annualized (a touch below the BoC's 2.8% forecast), the subsequent weak March trade results suggest a slightly softer read -- and BMO has trimmed its estimate two ticks to 2.3%. The soft hand-off to Q2 points to a "notably cooler" 1% pace for the current quarter, and BMO continues to expect growth for the full year of 1.2%, or roughly half the U.S. growth rate, Porter added.

According to Porter, the "dash of reality" for Canadian GDP, alongside the milder U.S. job growth, "helped reignite prospects for near-term Bank of Canada rate cuts". He noted while Governor Macklem was "extraordinarily careful not to tip his timing hand" at this week's dual testimonies before government committees, he did allow that rate cuts were getting closer and that the Bank could indeed deviate from the Fed, within limits. "Said limits remain a mystery," Porter added, "but we'll stick with our view that the Bank can likely cut twice independent of the Fed, without causing undue strain on the currency."

Porter said: "The coming meeting on June 5 is again seen as a very real possibility for the first cut, especially with the Fed potentially back in play in the summer. We have been calling for the BoC's rate-cutting cycle to begin in June since late last year, and we are doggedly sticking to that call. While we never want to hang a rate decision on a single indicator, the April CPI (on May 21) looms very large. Macklem has already signalled that the Bank expects inflation to stick close to the current 2.9% pace for a few months, due to a pop in gasoline prices (and we readily concur), but all eyes will be on whether core measures stay cool."

The BoC, Porter noted, will also see April jobs (next Friday) and the official Q1 GDP results (May 31) before deciding on rates. But, he said, perhaps the second most important indicator tipping the BoC's decision will be the U.S. CPI (May 15). "Even if the BoC can go it alone, it sure would help if it appeared that U.S. cuts would soon follow," he added.

But they may not get that help. David Doyle, head of economics at Macquarie, said following today's April employment report in the U.S. that Macquarie's baseline for the FOMC remains that rate cuts are only likely in 2025. Doyle added: "This [today's] report should provide some reassurance to Chair Powell and the FOMC that their guidance that the next move is likely to be a cut is appropriate."