Canadian Stocks Pull Back Off Early Highs But Remain Mostly Positive

(RTTNews) - Canadian stocks showed a strong move to the upside in early trading on Wednesday but have given back ground over the course of the session.

After reaching its best intraday level in over a month, the benchmark S&P/TSX Composite Index is up 63.33 points or 0.3 percent at 20,485.18.

The early rally on Bay Street came following the release of a report from the Labor Department showing U.S. consumer prices increased by less than expected in the month of March.

The Labor Department said its consumer price index inched up by 0.1 percent in March after climbing by 0.4 percent in February. Economists had expected consumer prices to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 5.0 percent in March from 6.0 percent in February.

The year-over-year growth was slower than the 5.2 percent expected by economists and marks the smallest 12-month increase since May 2021.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.4 percent in March after advancing by 0.5 percent in February. The increase matched economist estimates.

The annual rate of growth by core consumer prices accelerated to 5.6 percent in March from 5.5 percent in February, which was also in line with expectations.

While traders initially reacted positively to report, comments from economists suggesting the Federal Reserve is still likely to raise rates by another quarter point early next month have partly offset the buying interest.

Meanwhile, the Bank of Canada once again left interest rates unchanged on Wednesday, citing expectations consumer price inflation will continue to ease in the coming months.

Canada's central bank held its target for the overnight rate at 4.50 percent for the second straight meeting after signaling in January that it expects to keep rates at their current level while it assesses the impact of the cumulative rate hikes.

The decision to leave rates unchanged comes as the bank expects consumer price inflation to fall quickly to around 3 percent in the middle of this year from 5.2 percent in February and then decline more gradually to the 2 percent target by the end of 2024.