Rising Canadian Stocks Spurred by Headlines of Possible Interest Rate Reduction due to Domestic Data

Canadian stocks saw a modest rally on Friday, with the benchmark S&P/TSX Composite Index surging to an intraday high of 28,607.30 before settling at 28,564.45, marking a 129.65 points (0.46%) increase.

The materials sector led the gains, rising 2.22%, followed by the health care sector, which added 1.62%. The consumer staples sector also saw a growth of 0.87%, while the consumer discretionary sector inched up by 0.59%.

However, the picture was not entirely rosy. Exports of passenger cars and trucks, as well as industrial machinery, plunged by 24.7% and 18.5% respectively. This contributed to an overall drop in exports of goods by 7.5%. Travel also declined by 11.1%, reflecting the ongoing impact of the global pandemic.

The economic slowdown was further evident in the contraction of Canada's GDP, which fell by 1.6% on a seasonally adjusted, annualized rate in the second quarter of 2025. Real GDP edged down 0.1% month-on-month in July.

Despite these challenges, top Canadian banks reported growth in their quarterly profits this week. The Laurentian Bank of Canada, TD Bank, and Bank of Nova Scotia posted strong profits, generating buying interest in the Canadian stock markets. Laurentian reported a net profit of 37.46 million CAD for the quarter and 108.39 million CAD for the first nine months, reversing prior losses. TD Bank recorded an adjusted Q3 profit of 3.87 billion CAD, up from 3.65 billion CAD a year earlier. Bank of Nova Scotia also announced solid Q3 results.

Among individual stocks, Brp Inc and Nexgen Energy Ltd were among the prime market-movers, while Celestica Inc Sv, Computer Modelling Group, Athabasca Oil Corp, Cenovus Energy Inc, and Transalta Corp were the notable losers. On the positive side, Endeavor Silver Corp, Seabridge Gold Inc, Equinox Gold Corp, and Bausch Health Companies Inc were the prominent gainers.

In an effort to mitigate the impact of the slapped 35% tariffs on all exports to the US excluding those falling under the Canada-US-Mexico Agreement, Canada is currently exploring new marketplaces for its exports beyond the US. Additionally, Carney has announced accelerated efforts to build major ports, railways, and energy grids in Canada to boost domestic trade and reduce reliance on foreign markets.

The mixed economic indicators and the ongoing trade tensions continue to pose challenges for the Canadian economy, but the resilience shown by the top Canadian banks and the efforts to diversify exports offer a glimmer of hope for a recovery.

Rising Canadian Stocks Spurred by Headlines of Possible Interest Rate Reduction due to Domestic Data