Investing.com - Canada’s main stock index fell on Monday as investors assessed a fresh acceleration in domestic inflation and its implications for Bank of Canada interest rates, while retreating oil prices added to uncertainty across commodity-linked markets.

By 11:57 ET (16:57 GMT), the S&P/TSX 60 index had fallen by 17 points, or 0.8%.

Canada’s annual inflation rate accelerated to 3.1% in September from 3.0% in August, Statistics Canada data showed on Monday, although the reading came in below economists’ expectations of 3.2%. Consumer prices rose 0.1% month over month after declining by the same margin in August.

"Following the hawkish tone of Governor Macklem’s comments over the weekend, markets had moved to price in a greater chance of a rate hike later this month, but today’s CPI data suggests that there is little rush and policymakers can take more time to assess how US trade relations and the impact of new tariffs develop before raising rates," CIBC analysts said.

The increase was driven largely by energy costs, with gasoline prices surging 27.8% from a year earlier. Grocery prices rose 1.7%, their smallest annual increase since May 2024, while shelter costs increased 1.8%. The Bank of Canada’s preferred underlying inflation measures also eased, with CPI-median slowing to 1.9% and CPI-trim to 1.8%.

The inflation report is the last major consumer-price reading before the central bank’s October 28 policy decision. Governor Tiff Macklem has signalled that the Bank of Canada could raise its inflation forecast as elevated energy prices complicate the outlook. Investors are weighing the risk that persistent oil-driven price pressures could prompt tighter monetary policy.

S&P, Nasdaq climb

U.S. stocks are trading higher on Monday, bouncing back after a steep sell-off in the artificial intelligence trade led to Wall Street’s worst weekly performance since late June. Investors are now turning their attention to a deluge of quarterly earnings reports that will begin this week.

At 12:00ET (17:00 GMT), the benchmark S&P 500 climbed 0.8% to 7,720.00 points, while the tech-heavy NASDAQ Composite surged 1.6% to 26,561.70 points. The blue-chip Dow Jones Industrial Average moved 0.1% higher to 52,058.21 points.

“[T]he Nasdaq is rebounding so far this morning following a brutal selloff as investors hope a busy week of earnings will help bolster sentiment toward the group,” analysts at Vital Knowledge said in a note.

The rebound followed a bruising week in which concerns swirled around debt-fueled financing of AI infrastructure and higher-for-longer borrowing costs. The Nasdaq Composite fell 4.5% last week, ending a four-week winning streak, while the S&P 500 lost nearly 2%, its steepest weekly decline since late June. The Dow Jones Industrial Average gained 0.7%.

Chip stocks were among the hardest hit, with the Philadelphia Semiconductor Index slumping to its longest losing streak since the 2008 financial crisis on Friday. Nvidia-backed data centre operator CoreWeave (NASDAQ: CRWV), in particular, shed around a fourth of its value last week, while cloud computing giant Oracle also fell sharply.

Attention now turns to earnings from major technology companies this week, including Meta Platforms (NASDAQ: META) and Tesla (NASDAQ: TSLA).

Oil dips

Oil prices eased after U.S. President Donald Trump waived sanctions and tariffs on Russia, a move that could increase Russian fuel supplies. Iran’s Foreign Minister also told local media outlets on Sunday that a proposal to the U.S. to reopen the Strait of Hormuz within seven days still stands.

Benchmark Brent crude futures were last down by 1.9% to $107.38 a barrel, while U.S. West Texas Intermediate dived 1.7% to $97.14 per barrel.

Gold ticks lower

Gold prices slipped, as investors assessed the outlook for Federal Reserve monetary policy.

Spot gold last fell 0.6% to $4,139.97 an ounce and gold futures slipped 0.5% to $4,159.72 an ounce.

Bullion ended the previous week down 0.7%. Traders increased bets that the Fed will skip a rate hike this month after remarks from Chair Kevin Warsh last week. The central bank is then expected to lift rates in December.

In September, the Fed hiked borrowing costs for the first time since 2023, citing a need to corral mounting inflationary pressures. Higher rates can weigh on gold because bullion does not pay interest.

Scott Kanowsky contributed reporting.

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