Aug 23 (Reuters) – Canada’s main stock index rose to a record high on Friday, with energy and financial stocks adding to broad-based gains after U.S. Federal Reserve Chairman Jerome Powell backed the start of interest rate cuts, raising hopes the economy could avoid a recession.
Wall Street’s major indexes also rose after Powell said “the time has come” to cut interest rates. The Bank of Canada has already cut rates twice since June and is expected to ease further in the coming year.
“I would call it a kind of soft landing,” said Mike Archibald, portfolio manager at AGF Investments. “There are big moves in financials – they are benefiting from falling interest rates and increasing credit growth.”
Financials, which make up 29% of the TSX weighting, rose 1.2%, while energy gained 1.1% as oil prices were 2.5% higher at $74.83 a barrel.
The commodities group, which also includes metals mining and fertilizer companies, gained 1.2 percent as gold and copper prices rose. All 10 major sectors ended trading higher.
The union representing workers at CN said workers would strike on Monday after returning to work on Friday. A lockout at CPKC has not yet been officially lifted.
It would be a challenge for the economy to have both railway lines closed at the same time, Archibald said, adding: “It was widely expected that the government would take swift action to resolve this issue.”
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Reporting by Fergal Smith in Toronto and Nikhil Sharma in Bengaluru; Editing by Anil D’Silva, Shreya Biswas and Cynthia Osterman
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