(RTTNews) – Canadian stocks are up in positive territory around noon on Wednesday with investors reacting to the Bank of Canada’s decision to cut interest rates by 25 basis points. The recent weak labor market data and economic slowdown have raised prospects of further easing by the Canadian central bank.
Meanwhile, investors are awaiting the Federal Reserve’s monetary policy announcement, due later in the day.
Healthcare, consumer discretionary, communications and real estate stocks are among the prominent gainers.
The benchmark S&P/TSX Composite Index was up 81.53 points or 0.28% at 29,396.76 at noon.
Healthcare stock Bausch Health Companies is up 3.2%. Consumer discretionary stocks Magna International, Dollarama and Restaurant Brands International are gaining 2.5%, 1.1% and 1%, respectively.
Communications stocks Telus Corp, Cogeco Communications and Rogers Communications are up 0.8 to 0.9%.
In the real estate sector, FirstService Corp, Killam Apartment REIT, Northwest Healthcare Properties, Colliers International and Choice Properties are up 0.9 to 1.4%. Crombie Real Estate and Primaris are also notably higher.
Technology stock Celestica is down more than 4%. Constellation Software, Sylogis and Descartes Systems Group are down 0.8 to 2%.
The Canadian central bank said it decided to reduce its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.
The central bank’s Governing Council said that it determined a rate cut was appropriate to better balance the risks amid signs of weakness in the economy and less upside risk to inflation.
“Looking ahead, the disruptive effects of shifts in trade will continue to add costs even as they weigh on economic activity,” the Bank of Canada said. “Governing Council is proceeding carefully, with particular attention to the risks and uncertainties.”
The Bank of Canada said it is focused on ensuring that Canadians continue to have confidence in price stability through this “period of global upheaval” and pledged to support economic growth while ensuring inflation remains well controlled.
The decision to lower rates came as Canadian GDP declined by about 1.5% in the second quarter, with tariffs and trade uncertainty weighing heavily on economic activity. The bank also noted that Canadian employment has declined in the past two months.
The Canadian central bank acknowledged preferred measures of core inflation have been around 3% in recent months but said the upward momentum seen earlier this year has dissipated on a monthly basis.
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