Canadian stocks experienced a significant surge on Friday, effectively reversing the decline from the previous session. After closing Thursday's trading with moderate losses, the benchmark S&P/TSX Composite Index rebounded sharply to reach a new record intraday high. As of now, the index has climbed 284.55 points, or 1.2 percent, to stand at 23,322.02.
This uptick on Bay Street coincides with Federal Reserve Chair Jerome Powell's highly anticipated remarks, which have reinforced expectations that the central bank is poised to begin reducing interest rates. "The time has come for policy to adjust," Powell stated at the Jackson Hole Economic Symposium, adding that the "timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Powell's assertion that the Fed is ready to start cutting rates is based on his growing confidence that "inflation is on a sustainable path back to 2 percent."
His comments come on the heels of recent inflation figures, which bolster the belief that the Fed will reduce interest rates at its forthcoming monetary policy meeting in September. According to CME Group's FedWatch Tool, there is now a 65.5 percent probability of a quarter-point rate cut at the September 17-18 meeting, and a 34.5 percent chance of a half-point rate cut.
Leading the charge, interest rate-sensitive commercial real estate stocks saw significant gains, with the S&P/TSX Capped REIT Index rising by 1.7 percent. Healthcare stocks also demonstrated notable strength, reflected in the 1.6 percent increase in the S&P/TSX Capped Health Care Index. Additionally, financial, consumer discretionary, and energy stocks contributed to the upward movement, with most major sectors showing gains.
In other Canadian economic news, Statistics Canada reported a 0.3 percent decline in retail sales for June, primarily driven by decreased sales at motor vehicle and parts dealers. However, core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, saw a growth of 0.4 percent in June.
