By Fergal Smith
(Reuters) – Canada’s main stock index rose on Monday, with the real estate and utilities sectors leading a broad rally ahead of an expected rate cut this week by the Bank of Canada.
The S&P/TSX composite index ended up 182.26 points, or 0.8%, at 22,872.65, moving back within range of last Tuesday’s record high of 22,995.39.
“Expectations seem quite high for a small rate cut this week and as a result I think investors are feeling a little more encouraged that the economy is able to hold up,” said Michael Sprung, president of Sprung Investment Management.
The BoC is widely expected to cut rates by 25 basis points to 4.50% on Wednesday, the second cut in as many months, after recent data showed inflation was cooling.
“We are still in a very tumultuous period,” Sprung said. “Personally, I don’t believe inflation has been completely overcome yet… so I think we’ll get mixed signals for the rest of the year and the US elections will be part of that.”
Wall Street also advanced as investors reexamined the state of the presidential race after US President Joe Biden said he would not seek a second term.
The real estate and utilities sectors, which are dominated by high-dividend stocks that could particularly benefit from lower interest rates, rose nearly 2% and 1.3%, respectively.
Heavily weighted financials added 0.9%, energy rose 0.8% and technology ended almost 1% higher. Materials was the only major sector not to post gains.
Shares of Sleep Country Canada Holdings Inc were a standout, rising 27.1% after Fairfax Financial agreed to buy the retailer.
In contrast, shares of Air Canada fell 2.5% after the company cut its full-year core profit forecast.
