Canadian Stocks Rise Sharply Amid Fresh Fed Rate Cut Expectations

(RTTNews) - Canadian stocks posted strong gains on Friday after yesterday's slump as investors renewed their bets on another rate cut by the U.S. Federal Reserve. In addition, reports of deepening Canada-U.A.E. trade ties brought back optimism in the markets.

After opening just above yesterday's close, the benchmark S&P/TSX Composite Index gained momentum later in the session to finally settle at 30,160.65, up by 254.10 points (or 0.85%).

Ten of the 11 sectors posted gains today, with the healthcare sector leading the pack.

Yesterday's employment data from the U.S. painted a mixed picture.

While the nonfarm payroll numbers increased, unemployment data showed a hike in numbers.

In addition, the minutes of October Federal Reserve's meeting showed that the Fed officials were divergent on their perspectives about rate cuts, leaving traders uncertain on an additional Fed cut this year.

Today, New York Fed President John Williams remarked that he expects the central bank to lower its key interest rate as labor market weakness poses a bigger threat than higher inflation.

Williams added that there is room for "a further adjustment in the near term."

Seemingly in response to Williams' remarks, CME Group's FedWatch Tool indicated that the chances of a quarter point rate cut at the Fed's December meeting have soared to 69.5% from just 39.1% on Thursday.

Canada's Prime Minister Mark Carney's visit to the United Arab Emirates and personal meeting with UAE President Sheikh Mohamad bin Zayed Al Nahyan resulted in two major announcements - the signing of a new Foreign Investment Promotion and Protection Agreement to establish a stable environment for investors from both the nations and the launch of negotiations for a Comprehensive Economic Partnership Agreement to create a full free trade deal.

The UAE has agreed to invest around $50 billion in Canada in key sectors.

Carney summed up the meeting as marking of the start of a "new chapter."

Meanwhile, in the U.S. and other nations; for the past few days, enormous valuations in AI by several technology majors with questionable return on investment stoked serious concerns that the IT sector may be heading for another speculative bubble.

Yesterday, AI bellwether Nvidia came up with stellar earnings results beating market expectations though it did not trigger a rally as was expected.

Today however markets expressed renewed confidence in tech stocks, with the IT sector gaining ground.

Statistics Canada today revealed softness in the housing sector.

New housing prices fell 0.4% month-over-month in October, marking the eighth consecutive month without an increase following a 0.2% decline in September.

Meanwhile, Canada's retail trade excluding vehicles went up by 0.2% month-over-month in September.

Retail sales in Canada were expected to have remain unchanged from the previous month in October following a 0.7% decline in September.

Year-on-year, retail sales in Canada increased 3.40% in September over the same month in the previous year.

Major sectors that gained in today's trading were Healthcare (3.16%), Consumer Discretionary (2.43%), Real Estate (1.60%), and Consumer Staples (1.41%).

Among the individual stocks, Curaleaf Holdings Inc (9.45%), Tfi International Inc (6.46%), Chartwell Retirement Residences (2.27%), Magna International (5.64%), and Linamar Corp (4.21%) were the prominent gainers.

Energy sector alone lost in today's trading.

Among the individual stocks, International Petroleum Corp (2.39%), Canadian Natural Resources Ltd (1.65%), Ces Energy Solutions Corp (1.46%), and Birchcliff Energy Ltd (1.36%) were the notable losers.