The Canadian stock market reached a new milestone on Monday as the S&P/TSX Composite Index climbed to a record-breaking close. The index rose 50.41 points, or 0.2%, to finish the session at 33,090.96, surpassing the previous high established just last Friday.
Trading activity remained quieter than usual throughout the day, primarily because U.S. markets were closed for the Martin Luther King Jr. holiday. Despite the low volume, domestic factors and geopolitical shifts provided significant momentum for Canadian equities.
Mining and Energy Lead the Record Run
The Materials sector was the standout performer, jumping 2.2%. This surge was largely fueled by a record-high gold price, as investors sought “safe-haven” assets amid increasing global uncertainty.
- Gold Mining: Companies in this space benefited directly from a flight to safety.
- Energy: The sector posted a 0.5% gain.
- Consumer Staples: Added a modest 0.2%.
Conversely, the Technology sector faced headwinds, dropping 1.3%, while Financials—a heavily weighted component of the index—slipped 0.5%.
Inflation Data and Bank of Canada Projections
Recent economic indicators have played a crucial role in shaping market expectations. Canadian consumer prices rose 2.4% year-over-year in December, slightly exceeding initial forecasts. However, analysts attribute this primarily to “base effects” from the previous year’s tax adjustments.
Crucially, core inflation measures—which the central bank monitors closely—have cooled for three months in a row. Consequently, investors widely expect the Bank of Canada to maintain its benchmark interest rate at 2.25% during next week’s policy meeting.
Geopolitical Tension and the Greenland Factor
While Canadian domestic markets were upbeat, global sentiment was dampened by renewed trade tensions. U.S. President Donald Trump has threatened new tariffs on European nations that oppose his administration’s proposed acquisition of Greenland.
In response to the regional tension:
- Global stock indices generally retreated.
- The U.S. dollar weakened against “safety” currencies like the Japanese yen and Swiss franc.
- Canada is reportedly weighing the deployment of a small troop contingent to Greenland for upcoming NATO military exercises.
“With markets at near all-time highs, it’s not surprising to see volatility from time to time when risks emerge,” noted Josh Sheluk, portfolio manager at Verecan Capital Management.
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