Canadian Stocks Climb To Record Highs As U.S. Fed Rate Cut Optimism Grows

(RTTNews) - Canadian stocks jumped on Wednesday, continuing their rally after three consecutive bullish sessions, as investor confidence increases following reports indicating that Kevin Hassett, who favors lowering interest rates, may become the next U.S. Federal Reserve Chair.

In addition, an increase in the price of gold lifted the materials sector, contributing to the advance by the broader markets.

After opening a little above yesterday's close, the benchmark S&P/TSX Composite Index traded firmly positive throughout the session before settling at a new record closing high of 31,180.25, up by 279.60 points (or +0.90%).

Ten of the 11 sectors posted gains today, with the materials sector leading the pack.

As the current U.S. Federal Reserve Chair's term expires in May 2026, a Bloomberg report indicated that White House National Economic Council Director Kevin Hassett has emerged as the frontrunner as the next Fed Chair.

The news nudged the 10-year Treasury yield to below 4% for the first time in a month.

Hassett's economic perspectives align much with that of U.S. President Donald Trump, who is in favor of a low-interest rate regime.

Despite remarks by Fed officials in the recent weeks indicating a divergence of views on the need for another rate cut, since Monday three Fed officials have reiterated their preference for lower rates.

On the geopolitical front, the U.S. has come up with a 10-point peace plan to end the Russia-Ukraine war. The draft has been formally accepted by Ukraine's President Volodymyr Zelenskyy.

A U.S. envoy is visiting Russia soon to negotiate with President Vladimir Putin to take things forward.

Despite European Commission Chief Ursula von der Leyen accusing Russia of having "no real intent" for peace talks, since an end to the war could revive the sagging global economy, the U.S. efforts were welcomed by investors.

On the economic front, the day was uneventful with no significant data releases.

On the domestic front, Canadian Prime Minister Mark Carney is planning to infuse $500 million in loan guarantees for the Canadian softwood lumber industry and restrict foreign steel imports.

In addition, steel imports from countries without a Free Trade Agreement with Canada would be minimized to allow Canadian steel manufacturers to gain some leverage.

Freight rates for transporting steel and lumber interprovincially would be lowered.

Steel, aluminum, automobile, and softwood lumber industries were the hardest hit from the 35% tariff imposition by the U.S.

In October, Trump halted all trade talks with Canada, displeased after the Ontario government ran television ads in the U.S. using 1987 remarks from former U.S. president Ronald Reagan that mocked tariffs.

Despite an apology from Carney, Trump has not revoked his restrictions.

On the business front, in its latest quarter, defense contractor Calian Group Limited reported a fourth-quarter profit of $20.6 million with its revenue rising 12% compared to last year. On an adjusted basis, it earned $1 per diluted share in its latest quarter compared to an adjusted profit of 87 cents per diluted share last year. Revenue totalled $203.2 million, up from $181.2 million for the same quarter last year.

Major sectors that gained in today's trading were Materials (3.72%), Industrials (0.51%), IT (0.51%), and Consumer Staples (0.29%).

Among the individual stocks, Aya Gold and Silver Inc (13.47%), Endeavor Silver Corp (9.79%), Discovery Silver Corp (8.79%), First Majestic Silver Corp (8.52%), Aecon Group Inc (2.91%), and Boyd Group Services Inc (2.82%) were the prominent gainers.

Consumer Discretionary (0.33%) was the only major sector that lost in today's trading.

Among the individual stocks, Linamar Corp (2.15%), Pet Valu Holdings Ltd (1.55%), Magna International Inc (1.20%), and Brp Inc (0.89%) were the notable losers.