Canadian stocks exhibited a mixed performance on Wednesday, as investors cautiously reacted to the Bank of Canada's recent interest rate adjustment and anticipated the Federal Reserve's monetary policy update.
The Bank of Canada announced a quarter-point reduction in interest rates, a widely expected move, lowering the overnight rate to 3%, the bank rate to 3.25%, and the deposit rate to 2.95%. This follows two previous meetings where the central bank slashed rates by 50 basis points each time.
In the stock market, sectors such as materials and consumer staples gained some traction, while real estate, healthcare, and utilities faced declines. The benchmark S&P/TSX Composite Index rose by 45.55 points, or 0.18%, reaching 25,465.00, shortly after midday.
On the corporate front, Celestica Inc (CLS.TO) climbed nearly 6%, with other notable gains including Aecon Group (ARE.TO), Ero Copper (ERO.TO), MAG Silver (MAG.TO), and Velan Inc (VLN.TO), which increased between 3.5% and 4.2%. Other companies such as Capital Power Corporation (CPX.TO), Metro Inc (MRU.TO), Cameco Corporation (CCO.TO), iA Financial Corporation (IAG.TO), Bausch + Lomb (BLCO.TO), Hut 8 Corp (HUT.TO), Cargojet (CJT.TO), and Pan American Silver Corp (PAAS.TO) observed gains of 2% to 3%.
In notable company developments, CGI Inc. (GIB.TO) revealed plans to acquire the UK-based technology and engineering consultancy BJSS, renowned for its pioneering IT solutions and delivery prowess. This transaction is slated for finalization in February 2025, prompting a modest 0.4% increase in CGI's share price.
Conversely, MDA Space (MDA.TO) saw a significant decline of approximately 10%, with Real Matters (REAL.TO) and Kinaxis Inc (KXS.TO) reducing by 6.5% and 5%, respectively. Other significant decliners included Sangoma Technologies (STC.TO), Goeasy (GSY.TO), Tecsys Inc (TCS.TO), Canada Goose Holdings (GOOS.TO), Jamieson Wellness (JWEL.TO), and Interfor Corporation (IFP.TO).
Commenting on the economic landscape, the Bank of Canada acknowledged that consumer price inflation remains near 2%, and the economy possesses excess capacity. It remarked, "Lower interest rates are spurring household expenditure, and based on today's outlook, the economy is anticipated to gradually strengthen with inflation remaining around the target. Nonetheless, comprehensive and significant tariffs could challenge Canada’s economic durability."
The Bank additionally stated, "We will closely monitor developments to gauge the impact on economic activity, inflation, and monetary policy in Canada." It projected the nation's GDP growth to reach 1.8% in both 2025 and 2026, following a 1.3% rise in 2024, with consumer price inflation expected to hover around the 2% target over the next two years. However, the central bank cautioned that an extended trade conflict with the U.S. could lead to diminished GDP growth and increased prices in Canada.
