Canadian Stocks Set A New Record Fueled By Last Week's BoC Rate Cuts

(RTTNews) - Canadian stocks posted modest gains but scaled a new peak on Monday, continuing a rally triggered by the positivity gained from last week's central bank's rate cut which is seen as a support for an economy that has been hurt by US tariffs.

After opening just above the previous week's close, the benchmark S&P/TSX Composite Index saw further upside to reach an intraday high of 29,990.70 - a new record - and finally settle at 29,958.98, up by 190.62 points (or 0.64%).

Five of the 11 sectors posted gains today, with the materials sector leading the pack.

Data released by Statistics Canada today revealed that for the month of August, Canadian industrial producer prices rose 0.5% month-over-month and surged 4.0% year-over-year.

Last week, the Bank of Canada cut interest rates by 25 basis points to 2.5%, shedding inflation worries and focusing on unemployment.

Speaking on the decision, Bank of Canada's Governor Tiff Macklem stated that "balance of risk has shifted," with a softening of the labor market tipping the scale in favor of low lending rates.

Notably in August, the unemployment rate crawled up to 7.1%, with inflation clocking in at 1.9%.

On the trade front, relations between Canada and the US are now under the lens of investors. Canada has been hit with 35% tariffs by US President Donald Trump on its exports to the US. The levy has significantly affected aluminum, steel, and automobile sectors in Canada.

A vast majority of the products escape from tariffs though, as they are protected by the Canada-United States-Mexico Agreement (CUSMA), a free trade deal.

However, this pact elapses by the middle of 2026 and is up for re-negotiation.

Concerns now arise as Trump may use his authority to exert his geopolitical power over Canada and Mexico and redraw the lines more in favor of the US.

In a significant development on Friday, US Securities and Exchange Commission Chairperson Paul Atkins stated that the market watchdog will propose permitting public companies to report their earnings two times a year rather than the mandatory four-times-year requirement in place currently. This mirrors a similar proposal, weeks before, by Trump in the US.

On September 18, Canadian Prime Minister Mark Carney and Mexico's President Claudia Sheinbaum launched a new Comprehensive Strategic Partnership to deepen the ties between both countries. Both nations have been affected by the US-imposed tariffs to a greater extent.

Carney's government is tabling the budget this fall season, likely on November 4.

Carney had already warned that the upcoming budget will focus on "austerity and investments" leaving traders to guess on the extent of cuts in government spending.

The next meeting of the BoC is scheduled for October 29, i.e., before the budget, and another one on December 10 by which time, the impact of fiscal measures would be assimilated by the markets. By then, the economic scenario would be more clearer for the central bank to take a final decision.

Traders are also awaiting a speech by BoC Governor in Saskatoon tomorrow which could give an indication of what to expect in the coming months on monetary guidance.

Along with this, figures for Gross Domestic Product for July to be released by Statistics Canada on Friday remain in focus. Real Gross Domestic Product edged down 0.1% in June.

Major sectors that gained in today's trading were Materials (2.44%), Energy (1.38%), Utilities (0.59%), Financials (0.40%), and IT (0.05%).

Among the individual stocks, Endeavour Silver Corp (15.86%), First Majestic Silver Corp (14.24%), Seabridge Gold Inc (8.94%), Barrick Mining Corp (7.44%), and Paramount Resources Ltd (6.81%) were the prominent gainers.

Major sectors that lost in today's trading were Real Estate (0.16%), Healthcare (0.28%), Communication Services (0.41%), and Consumer Staples (1.81%).

Among the individual stocks, Premium Brands Holdings Corp (3.10%), Loblaw CO (2.74%), Cogeco Communications (1.26%), and Northwest Healthcare REIT (1.71%) were the notable losers.