Canada's TSX slightly down as investors gear up for earnings, Fed move

By Promit Mukherjee and Shubham Batra

(Reuters) -Canada's main stock index edged lower on Monday ahead of a busy earnings week and a raft of central bank data that could set the stage for interest rate actions in the coming months.

As of 1700 ET (2100 GMT), the S&P/TSX composite index was down 35.24 points, or 0.15%, at 22,779.57.

"It was a little bit of a breather today ahead of a busy week," said Martin Pelletier, senior portfolio manager at Wellington-Altus Private Counsel, an investment dealer for high net worth individuals.

Investors will be closely tracking the Federal Reserve's meeting on Wednesday for signals on when the U.S. central bank is likely to lower interest rates.

This week the Bank of Japan is likely to weigh a rate hike, sources have told Reuters, while the Bank of England's meeting is being watched for signs on when it might ease rates.

Monetary policy will influence the TSX and earnings could provide further triggers, Pelletier said.

The benchmark index scaled an all-time high in mid-June as long-term borrowing costs started to come down in Canada and other major central banks were also expected to reduce rates.

The index logged its fifth weekly gain on Friday, driven by a deceleration in monthly U.S. inflation. Year-to-date the index has risen by almost 10%.

Several heavyweight U.S. and Canadian companies report earnings this week, which could set the course for the TSX in the coming months, said Elvis Picardo, senior portfolio manager, iA Private Wealth, a wealth management firm.

"There are a lot of unloved sectors in Canada like utilities and telecoms, which are catching up," he said, noting that strong earnings and a robust outlook could boost the TSX further.

U.S. tech giants Microsoft , Meta, Amazon , and Apple report earnings this week, along with some major Canadian companies such as BCE, Canadian Natural Resources , Canadian Pacific Kansas City and Enbridge .

The latest U.S. jobs report is due on Friday, along with Canada's gross domestic product for May on Wednesday.

The GDP number would be the first economic report after the Bank of Canada's rate cut last week. Weaker economic growth could start building a case for yet another easing in September.

The index's decline was broad-based, with energy and technology stocks falling the most.

(Reporting by Promit Mukherjee in Ottawa and Shubham Batra in Bengaluru; Editing by Maju Samuel, Shreya Biswas and Richard Chang)