Canada’s main stock index rose to a record high on Thursday in trading thinned by the U.S. Thanksgiving holiday, led by energy and industrial shares, as the prospect of further rate cuts fed optimism the market’s upward momentum would continue through year-end.
The S&P/TSX composite index ended up 55.22 points, or 0.2%, at 25,543.52, moving past the record closing high it notched on Wednesday.
Volumes were lighter than usual with the U.S. stock market closed for the holiday.
“It’s all about grinding higher into the end of the year,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth. “Rates will come down, inflation will stay where it’s at ... There’s going to be a lot of spending over Thanksgiving and over the holiday season.”
Canada’s third-quarter gross domestic product report, due on Friday, could offer clues on the pace of expected further interest-rate cuts by the Bank of Canada. Economists forecast growth slowing to an annualized rate of 1%.
The energy sector rose 0.7%, helped by gains for Canadian Natural Resources Ltd, Canada’s largest oil and gas producer.
The price of U.S. oil edged up 0.2% to US$68.88 a barrel after Israel and Lebanese armed group Hezbollah traded accusations that their ceasefire had been violated.
Industrials were up 0.5%, helped by gains for railroad shares and Bombardier. The business-jet manufacturer was among the biggest decliners in the days after U.S. President-elect Donald Trump pledged to impose a 25% tariff on imports from Canada and Mexico.
Nine of 10 major sectors ended higher, with heavily weighted financials down slightly.
The Canadian dollar edged higher against its U.S. counterpart in holiday-thinned trading as investors assessed the chances of Canada avoiding stiff trade tariffs pledged by U.S. President-elect Donald Trump.
The loonie was trading 0.2% higher at 1.4005 to the U.S. dollar, or 71.40 U.S. cents, moving closer to the roughly 1.3985 level prevailing before Trump vowed on Monday to impose a 25% tariff on imports from Canada and Mexico as one of his first executive orders.
Trump’s inauguration is set to take place on Jan. 20.
“Our base case forecast continues to see Canada avoiding the 25% tariff threat in January, but ultimately facing a 10% tariff later next year on all non-energy goods, with potentially a few other exceptions like autos and parts,” Royce Mendes, managing director and head of macro strategy at Desjardins, said in a note.
The Mexican peso also notched gains as Mexico’s President Claudia Sheinbaum said she and Trump had agreed to maintain a good relationship in a friendly phone call that appeared to ease tensions between the top trading partners.
Canada’s federal government and the premiers of the 10 provinces agreed to work in a united and coordinated way against the tariff threat, Finance Minister Chrystia Freeland said on Wednesday.
The Canadian 10-year yield eased 2.6 basis points to 3.220%, its fifth straight day of declines.
Reuters