Canadian Stocks Hit Record High Amid Commodity Gains

On Thursday, Canada‘s primary stock index, the S&P/TSX Composite Index, surged to new record highs, buoyed by rising commodity prices and a depreciating Canadian dollar. The index concluded the trading day up 77.36 points, or 0.3%, closing at 24,302.26, surpassing the previous day’s record close.

Philip Petursson, Chief Investment Strategist at IG Wealth Management, highlighted the rally in both gold and energy producers as instrumental to the index’s gains. “Gold is moving up because it’s just had positive momentum over the last number of months. Energy has been moving on geopolitical risk,” Petursson explained.

The increase in energy prices was notably influenced by a 3.6% rise in oil prices, settling at $75.85 a barrel. This rise was partly due to supply concerns stemming from the escalating conflict between Israel and Iran in the Middle East. The energy sector observed a 2.2% gain, while the materials sector, encompassing fertilizer companies and metal mining shares, increased by 2.1% in response to higher gold and copper prices.

A declining Canadian dollar provided additional support for commodity producers. As Petursson noted, “Gold and oil are priced in U.S. dollars, so commodity producers’ revenues increase in Canadian dollar terms when the currency falls against the greenback.” The Canadian dollar reached its weakest intraday level since August 7th, trading at 1.3775 per U.S. dollar, equivalent to 72.60 U.S. cents. This development occurred as investors considered the potential of the Federal Reserve halting interest rate cuts while awaiting domestic jobs data slated for release on Friday.

Contrasting the positive trends in commodities, the financial sector acted as a drag on the index. It fell by 0.4% after TD Bank, one of Canada’s largest financial institutions, pleaded guilty to violating federal anti-money laundering laws in the United States. The bank agreed to a $3 billion penalty settlement, causing its shares to drop by 5%.

Looking ahead, investors remain vigilant as they anticipate upcoming Canadian unemployment data, which could affect the Bank of Canada’s monetary policy decisions. An expected increase in unemployment to 6.7% from 6.6% may prompt discussions of possible interest rate cuts in the near future.