One strategist says there are two major trends playing out in the market that equity investors should be aware of.
Christian Lawrence, a senior market strategist at Rabobank, said in an interview with BNN Bloomberg on Monday that the current economic environment is characterized by slowing growth and lower interest rates and investors should consider which sectors will benefit.
“I think the interest rate-sensitive areas are going to continue to benefit from this story. I do think that Bank of Canada continues to cut rates not just this year, but into next year as well. That does mean a steeper yield curve, which is traditionally very good for financials,” he said.
Lawrence added that the commodities sector is likely to lag amid slowing global growth.
Given the current path of interest rates, Lawrence predicts a “continued weakening for the Canadian dollar.”
“I think it’s all about interest rate differentials with the U.S. We’ve already seen the Bank of Canada cut rates twice (and) the market (is) expecting around two and a half more rate cuts by the end of the year.”
“I tend to think we’ll see two more rate cuts from the Bank of Canada. But of course, the (U.S. Federal Reserve) is yet to move. So it’s really about these changing interest rate stories between the U.S. and Canada.”
To watch the full interview with Lawrence click on the video above this article.