Canada’s main stock index rose on Thursday as gains in energy and healthcare stocks were complimented by positive earnings from some large domestic banks, with investors closely watching the gathering of central bankers at Jackson Hole for cues on monetary policy outlook.
At 10:05 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 109.77 points, or 0.55%, at 20,131.15, its highest level since Aug 19.
The heavily weighted financials sector rose 1.1%, led by a 1.7% rise in shares of Toronto-Dominion Bank.
TD Bank and Canadian Imperial Bank of Commerce posted better-than-expected third-quarter profits lifted by higher revenues as lending grew strongly.
However, analysts are warning that rising mortgage rates in Canada will slow down the housing market causing higher provisions due to an uptick in defaults. Canadian banks have already started to see a hit from market challenges and economic uncertainties.
The healthcare sector of the Toronto stock index, which is dominated by cannabis stocks, rose 2.1% after a 4.2% pull from Canopy Growth. Shares have gained 3.8% this week, but are still down more than 52% for the year.
The energy sector, which accounts for 18% of the TSX’s market capitalization, climbed 0.9%, as Brent crude prices added 0.5% on a possible OPEC+ supply cut.
Investors are focused on the pace of monetary policy and are prepping to hear U.S. Federal Reserve Chair Jerome Powell speak at the annual central bankers’ symposium at Jackson Hole on Friday.
“If rates continue to go considerably higher it’s going to have a big impact on everything because whether it’s Canada or any country in the world, the amount of leverage tied debt is monstrous,” Matt Skipp, President at SW8 Asset Management said.
“At the same time, a big part of the recent rally is the market sensing that significant uptick in inflationary pressures may be rolling over.”
The TSX posted one new 52-week highs and one new low.
Across all Canadian issues there were 7 new 52-week highs and 3 new lows, with total volume of 49.62 million shares.