In a surprising turn of events, stocks in Toronto experienced strong growth on Friday, reaching a one-month high. This comes as investors process data revealing an unexpected contraction in the economy during the second quarter, potentially indicating that interest rates are nearing their peak.
Midday Trading Reflects Broad Gains
During midday trading, technology and finance sectors led the way with significant gains, with only the electronic technology basket showing a decline. The S&P/TSX Composite Index, Canada’s major stock index, rose by 1%, reaching 20,501.71. This is close to the 20,532.93 closing figure recorded at the beginning of August. The blue-chip S&P/TSX 60 also experienced an increase of 1.1%, reaching 1,229.42.
Positive Performance from Major Banks
All of Canada’s major banks saw an increase in their stock prices. Bank of Nova Scotia rose by 1.7%, reaching 65.21 Canadian dollars (US$48.28), while Toronto-Dominion Bank recorded a 1% increase, reaching C$83.25.
Economic Contraction and Interest Rate Speculations
Canada’s gross domestic product (GDP) experienced a seasonally adjusted annualized rate decline of 0.2% in the three-month period examined. This figure sharply contrasts with the 1.2% growth forecasted by economists and the 1.5% rise projected by the Bank of Canada. The central bank, which recently resumed raising interest rates in June and July, will decide on monetary policy in the coming week.
Prominent Market Movers
Canadian Western Bank witnessed a significant stock price increase of 9.1%, reaching C$28.69. This surge came after the bank reported better-than-expected earnings for the latest quarter, primarily driven by higher net interest income that offset an increased provision for credit losses.