The Toronto Stock Exchange (TSX), Canada’s main securities index, is at an all-time high as interest rates move lower and commodity prices rally.
The S&P/TSX Composite Index finished trading on Sept. 20 at 23,867.55, an all-time closing high for the Toronto bourse. So far this year, the exchange has gained 14%.
The rise in the TSX comes as investors move into riskier assets such as stocks following a 50-basis point interest rate cut by the U.S. Federal Reserve.
Canadian equities have also been given a lift by a cumulative 75-basis point interest rate reduction from the Bank of Canada this year, and as commodity prices steadily increase.
Central banks in Canada, the U.S. and Europe have lowered interest rates since the start of the summer and signalled that further rate cuts are likely in coming months as inflation declines.
It was recently reported that inflation in Canada during August of this year declined to the Bank of Canada’s annualized 2% target, paving the way for more rate cuts ahead.
U.S. markets are also at or near all-time highs. Both the blue-chip Dow Jones Industrial Average and benchmark S&P 500 index hit record highs after the Fed’s 50-basis point rate reduction.
The Toronto Stock Exchange, which is heavily weighted with commodities, is also benefitting from a rise this year in prices for everything from industrial metals such as copper to precious metals such as gold.