Technology Drives Canada's Stock Index to Record High

The Canadian main stock index S&P/TSX Composite reached a new record value on Friday, driven by strong gains in the technology sector. A decline in bond yields, triggered by expectations of another significant interest rate cut by the Bank of Canada, favored this development. The index closed with a gain of 11.76 points, or 0.05 percent, at 25,691.8 points, surpassing the previous high from Thursday. The positive weekly balance of the index shows an increase of 0.22 percent, marking the fifth consecutive week of gains. Meanwhile, investors analyzed both U.S. and Canadian labor market data for November. While Canada's unemployment rate rose to 6.8 percent, marking an eight-year high outside of the pandemic, U.S. job growth recovered significantly after being affected by storms and strikes. Despite the recessionary sentiments in Canada, the robust U.S. job data provided confidence to the market, as noted by Barry Schwartz of Baskin Wealth Management. Interest rate cuts also make stocks more attractive, leading to increased speculation about a further rate cut of half a percentage point at the upcoming Bank of Canada meeting on December 11. The yield on ten-year Canadian government bonds fell to its lowest level in two months. The technology sector particularly benefited, as lower long-term rates favor the expected future cash flows of such growth companies. Technology stocks rose by 1.78 percent, led by gains in shares of e-commerce giant Shopify, which increased by 4.67 percent. The Bank of Montreal also scored with a gain of 4.72 percent after Scotiabank raised the price target for its shares. Another highlight was BRP, whose shares rose by an impressive 6.9 percent after the company's quarterly earnings exceeded expectations. However, the index was dampened by the energy sector, which fell by 2 percent as concerns over an oversupply weighed on oil prices.