Canadian Stocks Rally On Tamer-Than-Expected U.S. Inflation Data

(RTTNews) - Canadian stocks moved sharply higher over the course of the trading session on Wednesday, adding to the gains posted in the previous session.

The benchmark S&P/TSX Composite Index surged in morning trading and remained firmly positive throughout the afternoon, closing up 192.21 points or 1.0 percent at 20,070.77.

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

The report also showed a notable slowdown in the annual rate of consumer price growth, easing concerns about the outlook for interest rates.

While the Federal Reserve is still widely expected to raise interest rates by another quarter point later this month, the data has led to renewed optimism that will be the end of the central bank's rate-hiking cycle.

Meanwhile, traders largely shrugged off the Bank of Canada's widely expected decision to raise interest rates by another quarter point.

Citing persistent underlying price pressures, the Bank of Canada increased its target for the overnight rate to 5.0 percent, with the bank rate at 5.25 percent and the deposit rate at 5.0 percent.

While inflation has eased significantly since last summer, the Bank of Canada noted the downward momentum has come more from lower energy prices and less from easing underlying inflation.

Gold stocks showed a substantial move to the upside on the day, benefiting from a sharp increase by the price of the precious metal.

With gold for August delivery jumping $24.60 to $1,961.70 an ounce, the S&P/TSX Global Gold Index soared by 4.5 percent.

Significant strength was also visible among interest rate-sensitive real estate and utilities stocks, while tech stocks also showed a strong move to the upside.