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The TSX added a hefty 0.93 per cent on higher energy and gold stocks, as well as lower U.S. inflation.

The energy sector closed up by 2.98 per cent, in line with a string of Chinese purchases of U.S. and West African crude over the past few days.

The materials sector gained 1.39 per cent, aided by gold’s 1.18 per cent jump to US$1,901 per ounce, demonstrating elevated investor uncertainty and a preference for value preservation, despite improving economic conditions.

According to the U.S. Labor Department, inflation fell 0.1 per cent last month to 6.5 per cent YoY, spurred on by a 9.4-per-cent decrease in gasoline prices, which was offset by higher shelter costs. The figure marks the first CPI decline since May 2020, raising the probability, coupled with recent lower-than-expected inflation readings, of a more dovish monetary policy at the FED’s Feb 1st meeting.

Canadian inflation has experienced a similar recent trajectory, positioning the Bank of Canada (BoC) for a less-aggressive interest rate decision on January 25, 2023.

The country’s previously red-hot housing market continues to decline, with TD Economics predicting a 20-per-cent drop to the lowest level of home sales since 2001.

The Canadian Real Estate Association reported November’s actual national average home price at $632,802, a 12 per cent fall YoY. November home sales fell to 30,135, a 39-per-cent drop YoY.

That said, central banks from both countries will have to contend with strong labour markets, elevated wages and ensuing consumer spending, as well as geopolitical tensions and global supply chain interruptions, to get prices under control.

Despite lingering fears of a recession in 2023, resilience in North American discretionary spending has been ameliorating that sentiment, as evidenced by:

  • Aritzia’s record Q3 revenue of $624.6 million, up 37 per cent YoY, and net income of $70.7 million, up 8.9 per cent YoY, thanks to a 58-per-cent gain in U.S. revenue and a 36-per-cent gain in e-commerce sales
  • Organigram’s Q1 revenue of $43.3 million, up from $30.4 million YoY, and profits of $5.3 million, up from a loss of $1.3 million YoY, thanks to gains in adult-use recreational and international revenue, higher plant yields and increased cost efficiencies
  • A nine-day winning streak for Bitcoin, the longest since 2020, to just under US$19,000

Year to date, the TSX has returned 4 per cent, which has been competitive with the U.S.’s 2.15 per cent, Developed International’s 4.3 per cent and Emerging Markets’ 4.5 per cent.

Market movers

While discretionary and post-pandemic service-based revenue is supporting the Canadian economy as the BoC pursues its 2-per-cent inflation target, commodity companies in line with global net-zero goals are continuing to command our readers’ attention due to their long-term upside potential:

Surge Copper (SURG) released assay results for three holes from its Ootsa Property in B.C., identifying new copper-gold porphyry potential.

American Lithium (LI) confirmed 99.40-per-cent pure lithium carbonate precipitation during test work on its Tonopah Lithium Claims Project in Nevada.

Finally, AmmPower (AMMP) acquired 50.05 per cent of the common shares of Progressus Clean Technologies, a venture-stage green technology company developing novel hydrogen generation and separation technologies. Progressus’ intellectual property may enhance the ‎efficiency of AmmPower’s ammonia production through the extraction of hydrogen from dilute syngas.

Notable capital raises this week include Sixth Wave Innovations, NXT Energy Solutions, Surge Copper and Magna Mining.

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