A photograph captured in Toronto on September 11, 2024, features the TMX logo. Credit for the image goes to Paige Taylor White of The Canadian Press.
Canada's S&P/TSX composite index closed higher on Thursday, driven by gains in energy and industrial sectors. The market rose 55.22 points to settle at 25,543.52, reflecting a modest 0.22% increase. With U.S. markets closed for Thanksgiving, the day saw subdued trading activity. However, November remains a strong month for the TSX, with nearly a 6% rise to date, largely maintaining the momentum gained after the U.S. election.
The recent boost in investor sentiment stems from reduced uncertainty following the election, explained Kathrin Forrest, an equity specialist at Capital Group. Regardless of the election’s outcome, the resolution of uncertainty typically benefits risk assets, she noted.
Sectoral Trends and Economic Outlook
While technology stocks dominated gains throughout 2024, recent months have brought fresh strength to sectors like financials and consumer discretionary. This shift signals a broadening market appeal, said Forrest. Moreover, sectors expected to benefit from U.S. President-elect Donald Trump's economic proposals have also contributed to November’s rally.
Looking ahead, investors are eyeing key central bank decisions. The Bank of Canada is set to announce its interest rate policy on December 11, followed by the U.S. Federal Reserve on December 18. While there’s lingering speculation about potential rate cuts, uncertainty prevails. Canada’s economic growth and inflation figures, expected soon, could offer further clues about the Bank of Canada's direction.
Forrest pointed out that the Canadian economy has been more sluggish compared to the U.S., with higher interest rates putting pressure on Canadian consumers. Meanwhile, in the U.S., the Fed will weigh upcoming employment and inflation data before making its decision. Post-election, market expectations of U.S. rate cuts in 2025 have tempered, given the potential inflationary effects of Trump’s proposed policies.
Commodity Updates and Currency Movement
In commodities, January crude oil rose by 16 cents to US$68.88 per barrel, while natural gas gained nine cents to reach US$3.30 per MMBtu. Meanwhile, gold dipped by US$3.30 to US$2,652.60 an ounce, and copper slid a penny to US$4.13 per pound.
The Canadian dollar edged slightly higher, trading at 71.38 cents US, compared to 71.25 cents the previous day.
As November nears its end, markets are positioned for potential volatility as central bank decisions and fresh economic data unfold.
