Canadian Stocks Tick Higher, Supported By Materials And IT Gains

(RTTNews) - Canadian stocks rose incrementally on Monday, powered by momentum in materials stocks which gained impressively with rising gold prices as well as technology stocks which mirrored Wall Street gains.

After opening much higher than the previous week's close, the benchmark S&P/TSX Composite Index fell early in the session but managed to climb again and trade positively to finally close at 30,531.88, up by 60.20 points (or 0.20%).

Five of the 11 sectors posted gains today with Energy sector leading the pack.

In the U.S., the government shutdown entered its sixth day today. Despite the absence of official macroeconomic numbers to rely upon, markets are pricing in a 94.6% chance of 25-basis-point rate cut by the U.S. Federal Reserve at its upcoming October 28-29 meeting.

With no resolution in sight, the economic uncertainty led to demand for safe-havens, which helped gold prices to soar to $3,948.50 per troy ounce (a new record high). A surge in gold prices helped significant advances in the materials sector today.

Similarly, a rally in technology stocks in the U.S. following a spate of Artificial Intelligence related business deals helped Canadian IT stocks to move higher.

Canadian Prime Minister Mark Carney is visiting Washington tomorrow to meet U.S. President Donald Trump on a "working visit."

Trump's tariffs (of 35%) on Canadian exports to the U.S., have hit the Canadian economy very hard, with unemployment rising to 7.1% in August, with automobile, steel, aluminum, and lumber industries bearing most of the brunt.

Pressure is building for Carney to negotiate some tariff relief as none of the conciliatory efforts by Canada to have smooth bilateral relations with the U.S. are showing positive results as Trump is showing no sign of flexibility.

Canada, the U.S., and Mexico are preparing to renew the Canada-United States-Mexico free trade agreement that expires in mid-2026. Investors are doubtful if a smooth deal could be pulled through as they are concerned that Trump may push the pedal harder on both trading partners.

Despite these headwinds, Canadian stocks have galloped to new highs in the recent few weeks, underpinned by resilience in the economy.

The materials sector that accounts for nearly 16% of the TSX index, triggered nearly one-third of the returns in recent days.

Bloomberg reports that Carney's plans to fast-track key infrastructure projects is a driving force for the index more than the recent rate cuts instituted by the Bank of Canada.

On September 17, the BoC reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

As the economy suffers from trade damages due to the Trump-imposed tariffs, markets are pricing in additional rate cuts.

Analysts are also focused on the upcoming federal budget to be tabled on November 4, which could offer investors a vision on Canadian economy's future stability. The budget is likely to contain plans for key fiscal outlays.

Last week, during a speech at Ivey Business School, the Deputy Governor of Bank of Canada, Rhys Mendes, stated that there was growing discrepancy between where measures of core inflation stood, (hovering around 3%) and where underlying inflation stood (at an estimated 2.5%) and added that the central bank may soon abandon core inflation as a "preferred" measure of inflation.

On the business front, in a significant move, Barrick Mining has announced that it will sell its interests in the Tongon gold mine and certain assets in Ivory Coast to Atlantic Group for nearly $305 million in order to strengthen its balance sheet.

Traders are focused now on the job numbers to be released in Canada later this week which could hint on the likelihood of further rate cuts by the Canadian central bank.

Major sectors that gained in today's trading were Energy (1.36%), Materials (1.03%), Utilities (0.41%), and IT (0.29%).

Among the individual stocks, Baytex Energy Corp (4.55%), International Petroleum Corp (3.44%), Orla Mining Ltd (12.44%), G Mining Ventures Corp (8.42%), Perpetua Resources Corp (7.91%), and Brookfield Renewable Partners LP (3.10%) were the prominent gainers.

Major sectors that lost in today's trading were Healthcare (0.49%), Consumer Discretionary (0.52%), Real Estate (1.15%), and Consumer Staples (1.94%).

Among the individual stocks, Bausch Health Companies (3.21%), Dollarama Inc (2.73%), Colliers International (1.87%), Maple Leaf Foods (4.10%), and Jamieson Wellness Inc (2.37%) were the notable losers.