S&P/TSX Composite Surges Over 200 Points as U.S. Markets Rally before Inauguration

By Rosa Saba, The Canadian Press

TORONTO — Canada's primary stock index rose by more than 200 points on Friday, boosted by strong performances in the utilities and base metals sectors. This surge coincided with a solid rally in the U.S. stock markets on the final trading day before Donald Trump’s presidential inauguration.

According to John Zechner, chairman and lead equity manager at J. Zechner Associates, markets have experienced their best week since Trump's election, despite ongoing uncertainty. Zechner noted, “The risk-on trade seems to have come back in the past week.”

The S&P/TSX composite index closed up 221.72 points, settling at 25,067.92.

In New York, the Dow Jones Industrial Average increased by 334.70 points to close at 43,487.83. The S&P 500 index gained 59.32 points, reaching 5,996.66, while the Nasdaq composite climbed 291.91 points, ending at 19,630.20.

U.S. equities were propelled by strong earnings reports from major banks and a sense of optimism regarding some of Trump’s proposed policies, including tax cuts. Zechner also mentioned a positive inflation report from the U.S. earlier in the week, which helped revive hopes for interest rate cuts in 2025.

Prominent technology stocks led the gains on Wall Street Friday, with big names like Alphabet, Tesla, and Nvidia performing well.

With Trump’s inauguration set for Monday, investors are cautious about the potential tariffs he has hinted at imposing, which could increase inflation while the economy remains resilient, challenging the prospect of interest rate cuts anticipated for 2025. This sentiment was echoed by Zechner, who remarked, “Unless the economy really starts to break, inflation rates are not dropping.” He added, “There’s so many unknowns.”

In Canada, the atmosphere is marked by heightened uncertainty as traders await clarity on whether new tariffs will be implemented next week. Zechner emphasized that while Trump has made bold promises, the real impact of these on economic policy remains uncertain. He stated, “When it comes time to deliver, it’s a different environment than it was eight years ago.”

He also pointed out that Canada faces more potential downsides than the U.S. economically at this moment. With a weaker economy than its neighbor, the Bank of Canada is likely to continue reducing rates, which puts it in a challenging position. Zechner concluded, “The more they widen that spread to U.S. rates, which is quite high now, the more pressure you get on the Canadian dollar.”

The value of the Canadian dollar fell to 69.28 cents US down from 69.50 cents US on Thursday.

In commodity markets, the March crude oil contract dropped by 46 cents to close at US$77.39 per barrel. Meanwhile, the February natural gas contract fell by 31 cents to US$3.95 per mmBTU.

Gold for February delivery was down US$2.20 at US$2,748.70 an ounce, and the March copper contract saw a decrease of 7 cents at US$4.37 a pound.

— This report by The Canadian Press was first published on January 17, 2025.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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