Canada’s primary stock index dropped more than 600 points on Friday as investors grew concerned that the recent rally in technology stocks has pushed valuations to unsustainable levels.
“For the Canadian earnings season is currently underway.
“So far so good. It’s very early, but we have a strong start,” David Caron, a portfolio manager of North American equities at iA Global Asset Management, said in a statement.
He added that investors are “desperately looking for hard data on the adoption and progress of AI” and appear to be focusing more on negative surprises.
On Wednesday, the Bank of Canada increased its benchmark interest rate for the first time in over three years as it attempts to preempt rising price pressures. The central bank’s policy rate is now 2.5 per cent following a quarter-point hike.
Mc Mahon noted that the decision was largely anticipated by the investment community.
“We don’t think it was necessary, but it’s more about the waiting scheme so the bank is looking at inflation broadening to other components outside of gasoline,” he said.
Looking ahead, evidence that economic expansion stalled during the summer has led some economists to debate the timing of the next Bank of Canada rate increase. Statistics Canada reported on Friday that real gross domestic product remained essentially flat for the second consecutive month in August, missing economist forecasts.
Regarding the week ahead, Mc Mahon indicated he will be closely monitoring the federal budget on Thursday.
“I don’t know if (the federal government) still has some dry powder. They announced quite a bit since the budget of the last year,” he said.
Prime Minister Mark Carney has prioritized an aggressive infrastructure strategy to bolster the economy in response to U.S. tariffs and shifting geopolitical conditions.
The Canadian dollar traded at 71.63 cents US, compared to 71.51 cents US on Thursday.
The December crude oil contract rose US$2.12 to US$104.12 per barrel.
The December gold contract fell US$132.50 to US$3,898.90 an ounce.
