Stock Market Soars, Maintaining Seven Weekly Increase on TSX Index
On Friday, the Canadian stock market showcased a mixed performance, with energy stocks experiencing a decline of 1.7%, while gold mining stocks led gains, rising by 3.1%. The S&P/TSX composite index, which hit a record intra-day high earlier in the session, added 0.5% to 29,602.19 points by 10:07 ET.
The Bank of Canada (BoC) reduction of its key policy rate to a three-year low of 2.5% on Wednesday seemed to have little immediate impact on the stock market today. However, the BoC stated it was prepared for further cuts if risks to the economy rose.
In the mining sector, gold mining stocks shone brightly. Notable gains were seen by Kinross Gold and Endeavour Mining, each rising over 3%. Barrick Gold Mining also increased by 6.3%. The boost in gold mining stocks was partly due to the sale of gold mining shares worth 439 million US dollars by Newmont to Orla Mining in July 2021. Newmont sold its entire stake in Orla Mining for this sum.
However, Orla Mining saw a drop of 7.1% to $14.18 following the sale. This is the highest level the ratio has been since May 2021, according to data from LSEG Datastream.
Colin Cieszynski, chief market strategist at SIA Wealth Management, stated that Canadian retail sales were disappointing, and this isn't an issue specific to Canada. Retail sales data from July showed a 0.8% drop. However, an advanced indicator pointed to retail sales growth rebounding to 1% in August.
Cieszynski also mentioned that valuations have gotten stretched, and he believes that the trend is your friend till it ends. He stated that Canadian retail sales are expected to keep the pressure on the Bank of Canada for cutting rates.
The Toronto Stock Exchange's index currently trades at a 12-month forward price-earning ratio of 16.45. The S&P/TSX composite index is set for a seventh-consecutive week of gains as of Friday.
Despite the mixed performance, the Canadian stock market today continues to demonstrate resilience, with investors keeping a close eye on both the retail sales and monetary policy developments.
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