Canadian Stocks Scale New Peak Amid Rate Cut Expectations

(RTTNews) - Canadian stocks fell early in the session on Thursday as investors booked profits from recent strength but later gained ground to advance incrementally as rate cut expectations by central banks in Canada and the U.S. have increased.

After opening a little above yesterday's close, the benchmark S&P/TSX Composite Index turned lower and hit an intraday low of 29,903.08 before noon after which it gained momentum to inch upwards to finally close at 30,160.59, up by 52.92 points (or 0.18%). Notably, today's value is a new record close for the index.

Eight of the 11 sectors posted gains today, with the healthcare sector leading the pack.

The Bank of Canada and the U.S. Federal Reserve are set to announce their respective interest rate decisions on October 29.

The BoC is expected to release baseline projections for the economy and inflation along with its monetary policy report in October. The central bank stopped providing finite estimates for Canada's economy from the second quarter and instead opted to lay out a range of projections based on how U.S. tariffs impact the economy.

On September 17, the BoC reduced its key policy rate to 2.5% (a three-year low). After this first cut in six months, the BoC stated it would be ready to cut again if risks to the economy increased.

With the U.S. being Canada's largest trading partner, political and economic changes in the U.S. affect Canada heavily.

U.S. President Donald Trump slapped Canada with 35% tariffs on its exports to the U.S. These levies affected Canadian business houses, particularly automobile, aluminum, and steel industries, pretty heavily, leading to job cuts.

Canadian Prime Minister Mark Carney withdrew a lot of retaliatory tariffs on U.S. imports to facilitate smooth negotiation between Canada and U.S. on trade deals. However, the Canada-U.S. trade talks that high-level officials pursued are now in limbo as a court of appeals in the U.S. deemed the tariffs "illegal".

The Trump administration has appealed the ruling to the U.S. Supreme Court, where hearings commence in November and a verdict can be expected only by mid-2026.

Furthermore, the impending re-negotiation of the free-trade agreement between Canada-United States-Mexico is also fueling some uncertainty as Trump could push the pedal harder to flex the partners in his favor which could impede recovery in business investment.

In the U.S., the government entered its second day of shutdown which is delaying the release of various key data and figures.

Among those furloughed are employees of statistical agencies including the U.S. Bureau of Labor Statistics and the U.S. Census Bureau, whose data is relied upon by the U.S. Fed in its decision on changing baseline interest rates. It is unclear now how the U.S. central bank will decide with no reliable data.

However, weaker-than-expected U.S. private payrolls data from yesterday has increased expectations for rate cuts.

Against the backdrop of looming trade uncertainty internally and in the U.S., markets are also betting on another rate cut by the Bank of Canada.

Major sectors that gained in today's trading were Healthcare (2.28%), Consumer Discretionary (1.71%), IT (0.98%), Consumer Staples (0.49%), and Industrials (0.40%).

Among the individual stocks, Curaleaf Holdings Inc (7.07%), Brp Inc (4.29%), Bitfarms Ltd (4.60%), Dye & Durham Ltd (4.00%), and Brookfield Asset Management Ltd (2.01%) were the prominent gainers.

Major sectors that lost in today's trading were Real Estate (0.12%), Financials (0.06%), Communication Services (0.19%), Materials (0.40%), and Energy (0.66%).

Among the individual stocks, Arc Resources Ltd (0.23%), Skeena Resources Ltd (5.35%), Novagold Res Inc (4.66%), Ngex Minerals Ltd (2.63%), Baytex Energy Corp (2.75%), and Telus Corp (1.41%) were the notable losers.