Canada Stocks: TSX hits record high on hopes for larger US rate cut

Ballard Power Systems

13/09/2024 15:56

(Updated at 10:18 a.m. ET/1418 GMT)
    By Nikhil Sharma
       Sept 13 (Reuters) - Canada's main stock index hit
another record high on Friday in a broad-based rally led by
mining stocks, as investors assessed the overnight spike in
chances of a hefty U.S. interest rate cut next week.
    The Toronto Stock Exchange's S&P/TSX composite index
 .GSPTSE  was up 143.04 points, or 0.61%, at 23,618.73 and was
set to extend its record run.
    At least 11 sectors on the index nursed gains as the market
reacted to the expectation of a bigger rate cut by the Federal
Reserve at its Sept. 18 policy meeting.
    Leading sectoral gains was materials  .GSPTTMT , which
tracked gold prices that hit a record high on expectations of
U.S. interest rate cuts.
    Leading the index were First Majestic Silver Corp  AG.TO​ ,
Alamos Gold Inc​  AGI.TO  and Ballard Power Systems Inc​
 BLDP.TO , up between 3% and 4%.
    Graham Priest, investment adviser at BlueShore Financial,
said a larger U.S. cut "would be a strong stimulus for the
Canadian economy and Canadian markets" as "money would be
flowing into gold".
    "Rate decreases would be quite positive for a resource-based
economy".
    Expectations for a mighty half-point U.S. rate cut took a
dramatic turn after reports from the Financial Times and Wall
Street Journal called the decision "a close call".
    Former New York Fed President Bill Dudley pointed at a
strong case for a 50-bps interest rate cut which further added
to the uncertainty around next week' policy decision.
    Traders' bets of a 50-basis point now stand at 47%, compared
with 14% on Thursday, CME's FedWatch Tool showed.
    Back home in Canada, investors digested wholesale trade data
that grew by 0.4% in July from June, while Canadian industries'
capacity ran at 79.1% of capacity in the second quarter of 2024.
    TSX's heavyweight, the energy sector  .SPTTEN , rose 0.8%,
while the financials sector  .SPTTFS  gained 0.4%.

 (Reporting by Nikhil Sharma in Bengaluru; Editing by Maju
Samuel)
 ((Nikhil.Sharma@thomsonreuters.com;))