Canadian stock exchange reaches all-time high due to optimism about interest rate reduction by the Federal Reserve
The S&P/TSX Composite Index in Canada reached an all-time high on Wednesday, surpassing 28,390 points, as global economic factors continue to favour equities.
Markets are preparing for a high-stakes meeting between U.S. President Donald Trump and Russian President Vladimir Putin on Friday, with hopes of a potential end to the war in Ukraine. However, the near record closes of the TSX reflect a perfect confluence of global monetary policy shifts, currency tailwinds, and commodity-driven growth, all underpinning positive market expectations.
Investors anticipate the Federal Reserve will lower interest rates in September 2025, which typically encourages equity investments by lowering borrowing costs and increasing liquidity. A depreciating U.S. dollar benefits Canadian stocks, particularly those tied to commodities, by making exports more competitive and improving returns on foreign investments.
Rising prices for silver, platinum, copper, and energy commodities, driven by global green energy demand and industrial use, have boosted Canadian resource companies, which have significant weight in the TSX index. Several key sectors showed notable strength, with companies like TFI International and Teck Resources seeing impressive gains. The consumer discretionary sector also had a 1.7% increase, led by Gildan Activewear's 12% surge.
Strong Canadian economic data such as core retail sales jumping 1.9% in June 2025 provided a positive backdrop to investor sentiment. The solid earnings season, reduced trade tensions, and expectations of policy easing have lifted global equities from the April lows.
According to Colin Cieszynski, chief market strategist at SIA Wealth Management, people are focusing more on the U.S. interest rate cuts, the meeting between Trump and Putin, and potential tariff threats. Despite these concerns, equity markets are continuing to do well, with the TSX having seen an over 13% increase this year, outperforming the S&P 500's 10% rise.
Traders have fully priced in a September rate cut by the U.S. Federal Reserve, as suggested by the CME Group's FedWatch tool. On Wednesday, at 9:50 a.m. ET, the S&P/TSX composite index was up 0.39% at 28,028.83 points.
In other news, Gildan Activewear agreed to buy U.S. undergarments maker Hanesbrands for $2.2 billion. The Bank of Canada kept rates unchanged during its July interest rate decision, and at 13:30 ET, the Bank of Canada will release a summary of the monetary policy deliberations behind its July interest rate decision.
As the global economic landscape continues to evolve, the TSX's record-breaking performance serves as a testament to the resilience of the Canadian market and the potential for continued growth.
- Traders are keeping a close eye on the high-stakes meeting between US President Donald Trump and Russian President Vladimir Putin, hoping for an end to the war in Ukraine.
- A lowering of interest rates by the Federal Reserve in September 2025 is anticipated by investors, as it is believed to encourage equity investments and increase liquidity.
- The depreciation of the US dollar benefits Canadian stocks, particularly those linked to commodities, as it makes exports more competitive and boosts returns on foreign investments.
- The surge in prices for silver, platinum, copper, energy commodities, and other resources has positively impacted Canadian resource companies, contributing to the growth of the TSX index.
- Equity markets are continuing to perform well, with the TSX seeing an over 13% increase this year, outperforming the S&P 500's 10% rise, despite concerns related to US interest rate cuts, international politics, and potential tariff threats.
- The Bank of Canada's decision to keep rates unchanged, followed by the release of a summary of its monetary policy deliberations, is another event ultimately shaping the Canadian finance, business, and general-news landscape.
