(RTTNews) – Canadian stocks surged to new highs on Friday, with the recent interest rate cut decisions by the Bank of Canada as well as the US Federal Reserve on Wednesday continuing to lift market sentiment despite concerns from a section of analysts that valuations remain “stretched.”
After opening higher than yesterday’s close, the benchmark S&P/TSX Composite Index saw further upside as the day progressed before closing at 29,768.36, up by 314.83 points (or 1.07%). Today’s value is a new record high for the index.
Nine of the 11 sectors posted gains today with Materials sector leading the pack.
While announcing the rate cut by 25 basis points to 2.5%, Bank of Canada’s Governor Tiff Macklem acknowledged that trade uncertainty between Canada and the US persists but said the economy is nowhere near a recession.
In August, the unemployment rate crawled up to 7.1%, with inflation clocking in at 1.9%. A softening of the labor market compelled the BoC governing council to administer a rate cut.
The 35% tariffs imposed by US President Donald Trump on a majority of Canadian exports affected mainly automobile, aluminum, and steel sectors. As most of Canadian exports to the US are covered under the Canada-US-Mexico Agreement, which would not suffer Trump’s tariffs, despite weak second quarter growth, traders are optimistic about growth in the second half.
In the November 4 annual budget, Canadian Prime Minister Mark Carney is expected to shed more light on the macro-and-micro economic picture.
Carney has already warned that the budget will carry a lot of “austerity and investments.” Concerns have surfaced as fiscal cuts to public services could result in “attrition” and thereby increase unemployment.
Data released by Statistics Canada today revealed that Canadian retail sales excluding vehicles fell 1.2% month-over-month in July 2025, reversing a revised 2.2% gain in June.
Carney is on a visit to Mexico. Leaders of both nations are working to strengthen bilateral ties as well as consolidate the free trade pact they share with the US.
Carney is exploring all avenues to minimize the impact of Trump’s tariffs before they seep deeper into the economy. However, with the CUSMA pact up for re-negotiation next year, Carney is striking deals with Mexico and other nations cautiously without angering the US.
Of note, Canada’s bilateral goods trade with Mexico in 2024 totaled just C$55.4 billion compared to C$924.4 billion with the US.
The “reciprocal tariff” imposed by the US on Canada and various other nations were deemed “illegal” by a lower court in the US on August 29.
Trump’s administration has appealed the verdict to the US Supreme Court, where their request for a “speedy trial” has been accepted.
As hearings commence on November 5, Trump has asserted that winning the case would make the US “the richest country” in the world.
Be that as it may, countries engaged in negotiations with the US to arrive at a tariff framework deal (including Canada) are now left confused with their economies facing uncertainty as a final verdict could be expected only by the middle of next year.
Major sectors that gained in today’s trading were Materials (3.88%), Consumer Staples (1.27%), Financials (0.86%), and IT (0.78%).
Among the individual stocks, Barrick Mining Corp (9.71%), Endeavour Silver Corp (9.25%), First Majestic Silver Corp (7.08%), Franco-Nevada Corp (5.62%) and Alimentation Couche-Tard Inc (2.53%) were the prominent gainers.
Major sectors that lost in today’s trading were Healthcare (0.24%) and Energy (2.23%).
Among the individual stocks, Vermillion Energy Inc (3.89%), Baytex Energy Corp (3.49%), Suncor Energy Inc (2.78%), Bausch Health Companies Inc (2.52%), and Quebecor Inc (1.21%) were the notable losers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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