Canadian Stocks Climb As Traders Assess Decisions By BoC, Fed

(RTTNews) - Canadian stocks advanced on Wednesday as investors dissected the monetary policy outlook of the Bank of Canada and the reasoning for keeping interest rates unchanged, contrasting it with the rate cut instituted by the U.S. Federal Reserve.

After opening a little lower than yesterday's close, the benchmark S&P/TSX Composite Index remained volatile until the afternoon after which it regained momentum to settle at 31,490.85, up by 246.48 points (or 0.79%).

Seven of the 11 sectors posted gains today, with the IT sector leading the pack.

In line with analysts' expectations, after two consecutive interest rate cuts, the Bank of Canada left rates unchanged and maintained its target for the overnight rate at 2.25% - with the Bank Rate at 2.50% and the Deposit Rate at 2.20%.

This decision came as the BoC's Governing Council believes the current policy rate is at about the right level to keep inflation close to 2%t while helping the economy through a period of structural adjustment. The BoC noted that "uncertainty remains elevated" and stressed that it is prepared to respond if the economic outlook changes.

The central bank added that it is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.

Canadian economy grew by a "surprisingly strong" 2.6% in the third quarter, the Bank of Canada said.

The central bank's outlook on the economy matters more when the national economy is being squeezed by the 35% tariffs imposed by Canada's long-term trade neighbor U.S.

Leading to severe job losses across the steel, aluminum, automobile, and soft lumber sectors, which bore the maximum brunt, the tariffs set by U.S. President Donald Trump is continuing to inflict severe damage to Canadian economy.

In the U.S., the Federal Reserve's FOMC cut key interest rates by 25 basis points to 3.50% to 3.75% even when inflation numbers in the U.S. remain elevated. Notably, this is the third cut of the year.

Analysts are dissecting the address by the Fed Chair Jerome Powell to comprehend the central bank's outlook on the economy and his comments on the rate-cut trajectory.

Investors are also focusing on the final Summary of Economic Projections (SEP) for 2025 from the Fed which carries forecasts from the Fed officials on global and national economies, inflation, and interest rates in the coming months.

The Canada-United States-Mexico Free-Trade Agreement aided Canada to bypass the tariff route.

However, with the deal up for renewal next year, Trump has indicated that the U.S. may walk out of the pact altogether or insist on new provisions to be made which economists fear would be largely in favor of the U.S.

Prior to that, Trump shocked Canada by halting all trade talks abruptly.

In this backdrop, Canada's ambassador to the U.S. and chief trade negotiator with Trump administration Kirsten Hillman has announced that she is stepping down in the new year.

Prime Minister Mark Carney did not comment on reports speculating that he is considering experienced business executive Mark Wiseman to be the next ambassador.

Major sectors that gained in today's trading were IT (1.62%), Materials (1.07%), Financials (1.06%), and Consumer Discretionary (0.64%).

Among the individual stocks, Lightspeed Commerce Inc (6.88%), Quarterhill Inc (6.52%), Shopify Inc (4.84%), G Mining Ventures Corp (6.05%), and Trisura Group Ltd (2.88%) were the prominent gainers.

Major sectors that lost in today's trading were Communication Services (1.07%), Utilities (0.55%), Consumer Staples (0.41%), and Healthcare (0.18%).

Among the individual stocks, Rogers Communications Inc (2.33%), Telus Corp (0.92%), Capital Power Corp (4.70%), The North West Company Inc (4.46%), and Curaleaf Holdings Inc (2.13%) were the notable losers.