(Bloomberg) -- The S&P/TSX Composite Index, Canada’s stock market benchmark, rallied to close above 24,000 points for the first time Thursday as China’s stimulus plans boosted shares in base metal providers.
The index ended 0.5% higher at 24,033.83 points, its 26th closing record so far in 2024. The gauge has climbed 15% year to date, rebounding from a decline of more than 16% last year
Thursday’s milestone comes less than two months after the index eclipsed 23,000 points for the first time in July, when the advance was driven by Bank of Canada rate cuts. Strategists expect the momentum in Toronto trading to continue.
The rally is gaining support in part because “Canada trades at a massive valuation discount relative to the US,” AGF Investments vice-president and portfolio manager Mike Archibald said in a telephone interview.
Stocks rose after China unveiled plans to stimulate its economy, which lifted base metals prices including copper and sparked an improvement in mining equities. Gold miners also climbed as bullion prices hit another record on expectations the Federal Reserve would continue cutting interest rates.
In addition, Canada’s biggest banks have climbed 14% since the first of three Bank of Canada rate cuts in June, allowing the country’s largest industry sector to outperform. With the US cutting rates and the yield curve steepening, banks are rising again, said Philip Petursson, IGM Financial’s chief investment strategist.
To be sure, Canada’s economy and labor market are flashing signs of trouble, spurring some strategists to recommend an underweight position in Toronto-listed stocks.
But with the financial and materials sectors comprising over 45% of the S&P/TSX Composite Index, the stocks gauge is likely to push higher. More than three stocks have gained in the S&P/TSX so far this year for every one that has fallen and only one sector — telecommunications — is down for the year.
“What we’re seeing is a pretty broad-based rally,” said Jamie Murray, portfolio manager and head of research at Murray Wealth Group.
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