Canadian stocks are firing on all cylinders this year, with the blue-chip TSX Composite sitting at its all-time high of $30,470. It has jumped by over 37% from its lowest level in April. This article explores some of the top reasons why it has jumped this year and what to expect.
TSX Composite Index has jumped as global stocks jump
The TSX Composite Index has been in a strong uptrend in the past few months because of the ongoing surge in global stocks. In the United States, the top indices like the S&P 500 and Nasdaq 100 have all jumped to a record high this year.
Similarly, in Asia, stock indices like the Hang Seng, Nikkei 225, and KOSPI have all jumped to their record highs. It is common for Canadian stocks to jump whenever there is a global stock market rally.
Upcoming Donald Trump and Mark Carney meeting
The TSX Composite Index has jumped in the past few months as investors await a meeting between Mark Carney and Donald Trump in Washington this week. The two leaders will most likely talk about tariffs and the trade relations between the US, Canada, and Mexico.
Analysts and investors are optimistic that the two countries will reach a deal to exempt Canada from some tariffs, a move that would benefit the country’s stock market. However, the TSX Composite Index will likely retreat after the meeting as investors sell the news.
Soaring gold and silver prices
The TSX Composite Index is benefiting from the soaring silver and gold prices this year. Silver has jumped close to $50, while gold is nearing the important resistance level at $4,000.
This surge has benefited numerous companies that provide these products in Canada. Discovery Silver Corp stock has jumped by 610% this year, while SSR Mining, Lundin Gold, Novagold Resources, New Gold, Aris Mining, and Oceanagold have all jumped by over 158% this year.
Other companies in the gold and silver mining industries have also had strong gains. They include companies like Kinross Gold, Sandstorm, Barrick Mining, First Majestic, and Agnico Eagle Mines have all soared this year.
Bank of Canada interest rate cuts
The TSX Composite Index has also soared because of the recent BoC rate cuts. It slashed rates from 3% to 2.75% in March after holding them steady for a while. It then slashed rates to 2.75% in the last meeting as the economy contracted.
Analysts expect that the bank will deliver two more cuts this year, ending them at 2.25%. These interest rate cuts have brought its 10-year bond yields from 3.65% in August to 3.18%. It has also formed a bearish flag pattern, pointing to more downside.
Therefore, investors have rotated from Canadian bonds to the stock market. Besides, the TSX Composite has a dividend yield of 3.4% and is still growing.
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