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What’s going on here?
S&P/TSX futures climbed 0.27% on January 3, 2025, suggesting a promising start for Toronto’s stock market, mirroring Wall Street’s upbeat trend.
What does this mean?
Following a robust 18% gain in 2024, the Toronto Stock Exchange’s S&P/TSX index is aiming to end the short midweek on a positive note, despite having dipped 3.6% in December due to the Federal Reserve’s aggressive stance on interest rates. The outlook is bolstered by Canada’s manufacturing sector, which saw its fastest growth in nearly two years last month. This boom is largely supported by US clients stockpiling ahead of potential tariff hikes proposed by President-elect Donald Trump. Investors are keenly awaiting upcoming employment data from both Canada and the US, which will shine a light on future monetary policies. Meanwhile, despite a temporary dip, oil prices are poised for weekly gains, offering a lift to Canada’s energy sector stocks.
Why should I care?
For markets: Anticipating a strong kickoff.
The rise in S&P/TSX futures suggests a hopeful start to the year, overcoming December’s Federal Reserve-induced setbacks. Canadian energy and manufacturing sectors are strong contenders to watch thanks to potential tariff moves by the US, which could shake up cross-border trade dynamics and influence sectoral growth.
The bigger picture: Navigating trade waters and financial policies.
The looming potential for a 25% tariff on Canadian imports could reshape North American trade landscapes, as policy shifts likely influence Canada-US economic relations significantly. Investors should brace for a period of adjustment, with employment reports this month crucial in guiding central banks’ interest rate strategies.
