Canadian Stocks Surge As Optimism About Fed Rate Cuts Grows

(RTTNews) - The Canadian stock market on Wednesday extended its previous session's gains to set a new record today, supported by growing investor confidence about the possibility of an interest rate cut by the Fed.

After opening higher than yesterday's close, the benchmark S&P/TSX Composite Index moved up to reach an intra-ay high of 27,955.55 in less than an hour. Holding firm, the index remained positive before finally settling at a new record closing high of 27,920.87, up by 350.79 points (or 1.27%).

S&P Global Canada data revealed that the Composite PMI rose to 48.7 in July 2025 from 44.0 in June. Both the manufacturing (46.1 vs 45.6) and services (49.3 vs 44.3) sectors posted softer downturns.

Days after the US raised tariffs on Canada from the previous 25% to 35%, Canadian Prime Minister Mark Carney yesterday stated that he will speak with US President Donald Trump "when it makes sense."

Fortunately, many of Canada's exports (around 85%) to US are covered by the 2020 Canada-United States-Mexico Agreement. Hence, as of now, Canada is better off than any of the other trading partners of the US.

The earlier imposed 50% tariffs on steel, aluminum, and copper are excluded from USMCA. Still, small and medium companies in Canada - especially automobile and manufacturing firms - have been severely impacted by the whopping 35% levy.

However, to add to the uncertainty, the USMCA is up for re-negotiation in 2026, where again Trump may hold the cards.

Statistics Canada had reported that exports to the US dropped by 12.5% in June 2025 compared to June 2024.

Traders expect the Fed to cut lending rates in September as last week's economic data from the US revealed a dismal employment number along with indications of inflationary pressure emerging in the economy.

Major sectors that gained in today's trading were IT (5.06%), Materials (0.58%), Financials (0.44%), Consumer Staples (0.32%), and Consumer Discretionary (0.26%).

Among the individual stocks, Shopify Inc (21.50%), Bitfarms Ltd (4.19%), Ssr Mining Inc (17.09%), Orla Mining Ltd (5.98%), Great-West Lifeco Inc (3.67%), Alimentation Couche-Tard Inc (0.34%), and Premium Brands Holdings (5.76%) were the prominent gainers.

Major sectors that lost in today's trading were Real Estate (0.13%), Energy (0.45%), Industrials (0.60%), Healthcare (0.75%), and Communication Services (1.13%).

Among the individual stocks, Bausch Health Companies (3.41%), Rogers Communications (2.13%), BCE Inc (1.39%), and Quebecor Inc (1.18%) were the notable losers.