TORONTO – Canada’s main stock index gained more than 200 points Friday, led by strength in utilities and base metals, while U.S. stock markets saw a steady rally on the last trading day before Donald Trump is inaugurated as president.
Markets cruised to their best week since Donald Trump was elected U.S. president, despite the uncertainty that lies ahead, said John Zechner, chairman and lead equity manager at J. Zechner Associates.
“The risk-on trade seems to have come back in the past week,” he said.
The S&P/TSX composite index closed up 221.72 points at 25,067.92.
In New York, the Dow Jones industrial average was up 334.70 points at 43,487.83. The S&P 500 index was up 59.32 points at 5,996.66, while the Nasdaq composite was up 291.91 points at 19,630.20.
Equities were spurred on this week by good earnings from the major U.S. banks as well as optimism over some of incoming president Trump’s promised policies, such as tax cuts, said Zechner.
There was also a promising report on U.S. inflation earlier in the week that helped reignite hopes for interest rate cuts in 2025.
Major tech names led the way higher in the U.S. Friday, including Alphabet, Tesla and Nvidia.
Trump’s inauguration is on Monday. For U.S. markets, the tariffs he has said he will impose could be an upward pressure on inflation, with the economy already remaining stubbornly resilient and expectations for interest rate cuts in 2025 dwindling.
“Unless the economy really starts to break, inflation rates are not dropping,” said Zechner.
“There’s so many unknowns.”
In Canada, the uncertainty is even stronger as investors wait for news on whether the tariffs will be introduced next week.
Trump has made big promises and threats, said Zechner, but it remains to be seen what he will actually do.
“When it comes time to deliver, it’s a different environment than it was eight years ago,” he said.
“The market’s hanging in relatively well. But, you know, Canada has a lot more potential negatives in front of it, probably, than the U.S. does economically right now.”
With the economy in Canada weaker than in the U.S., the Bank of Canada is expected to keep cutting, said Zechner. But it’s in an increasingly tough spot, he added.
“The more they widen that spread to U.S. rates, which is quite high now, the more you get the pressure on the Canadian dollar,” he said.
“There’s a lot more we don’t know than what we do know.”
The Canadian dollar traded for 69.28 cents US compared with 69.50 cents US on Thursday.
The March crude oil contract was down 46 cents at US$77.39 per barrel and the February natural gas contract was down 31 cents at US$3.95 per mmBTU.
The February gold contract was down US$2.20 at US$2,748.70 an ounce and the March copper contract was down seven cents at US$4.37 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Jan. 17, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
