Canadian Stocks Jump Amid Rising Optimism On Fed Rate Cuts

(RTTNews) - Canadian stocks surged on Tuesday amid increased investor optimism about a US Fed rate cut sooner amid the ongoing US tariff war with a few of its major trading partners.

Notably, on Monday the markets remained closed on account of the Civic Holiday.

After opening much higher than the previous close, the benchmark S&P/TSX Composite Index remain firmly positive throughout the day before settling at 27,570.08, up by 549.65 points (or 2.03%). This is a fresh record for the index.

On Sunday, Canada's federal minister in-charge of US-Canada trade talks stated that he sees a pathway to reduce US tariffs imposed on Canada.

Currently, Canada has been slapped with 35% tariffs on goods not covered under the USMCA, which has naturally rattled the Canadian industries, especially lumber, automobiles, and manufacturing as well as domestic business houses.

As the tariffs are slated to take effect Friday, hectic parleys are underway between US and Canadian high-level trade representatives to find a common path to settle this long-drawn crisis.

To ease the relations more, without imposing any retaliatory tariffs, Canada has allowed a majority of US goods to now enter tariff-free into Canada.

On the external front, today US President Donald Trump hinted at a change of guard at the US Fed. The current Fed Chair has resisted calls for lowering the borrowing rates.

Trump has explicitly criticized the central bank for keeping rates higher when the US economy has so far shown resilience to the effects of the ongoing trade war.

Today, data released by Statistics Canada revealed a seasonally adjusted trade deficit of C$5.9 billion in June, widening from the revised C$5.5 billion of May. Imports expanded by 1.4%. Exports to the US which have been subject to "sector-specific tariffs" were 3.1% higher than May.

Comparatively, the US trade deficit narrowed to $60.2 billion in June.

Last week's economic data in the US revealed weakness in the US jobs market. However, the concerns have stoked bets that the US Fed will act now and cannot avoid cutting interest rates.

Traders are anticipating two rates cuts this year, one in September, and another one, possibly by December.

Analysts feel that a broader picture of the economy shall emerge once trade deal is finalized and the Fed's stance becomes clearer in the coming days.

All major sectors traded in the green today.

Significant gainers among the 11 sectors were Materials (5.62%), IT (3.02%), Healthcare (2.73%), and Consumer Staples (1.44%).

Among the individual stocks, Kinross Gold Corp (11.99%), Eldorado Gold (9.24%), Shopify Inc (7.05%), Coveo Solutions Inc (5.73%), and Bausch Health Companies (3.93%) were the prominent gainers.

Other sectors viz., Consumer Discretionary, Industrials, Financials, Real Estate, Energy, Utilities, and Communication Services, all gained anywhere from 1.25% to 0.17%.

Energy Fuels Inc (11.68%) and Denison Mines Corp (9.25%) were among the prime market-moving stocks today.