Canadian Market Modestly Higher After BoC Delivers Another Rate Cut

(RTTNews) - Canadian stocks are turning in a mixed performance in cautious trade on Wednesday with investors digesting the Bank of Canada's interest rate decision and awaiting the monetary policy announcement from the Federal Reserve.

The Bank of Canada lowered interest rates by a quarter point, as widely expected. With this the overnight rate has dropped to 3%, the bank rate to 3.25% and the deposit rate to 2.95%.

The central bank had cut rates by 50 basis points at each of its two previous meetings.

Materials and consumer staples stocks are finding some support, while real estate, healthcare and utilities shares are weak.

The benchmark S&P/TSX Composite Index is up 45.55 points or 0.18% at 25,465.00 about half an hour past noon.

Celestica Inc (CLS.TO) is gaining nearly 6%. Aecon Group (ARE.TO), Ero Copper (ERO.TO), MAG Silver (MAG.TO) and Velan Inc (VLN.TO) are up 3.5 to 4.2%.

Capital Power Corporation (CPX.TO), Metro Inc (MRU.TO), Cameco Corporation (CCO.TO), iA Financial Corporation (IAG.TO), Bausch + Lomb (BLCO.TO), Hut 8 Corp (HUT.TO), Cargojet (CJT.TO) and Pan American Silver Corp (PAAS.TO) are up 2 to 3%.

In company news, CGI Inc. (GIB.TO) announced that it has signed an agreement to acquire BJSS, a UK-based technology and engineering consultancy known for its innovative IT solutions, software engineering expertise and delivery excellence. The transaction is expected to close in February 2025. CGI shares are up 0.4%.

MDA Space (MDA.TO) is down by about 10%. Real Matters (REAL.TO) is down 6.5% and Kinaxis Inc (KXS.TO) is lower by about 5%.

Sangoma Technologies (STC.TO), Goeasy (GSY.TO), Tecsys Inc (TCS.TO), Canada Goose Holdings (GOOS.TO), Jamieson Wellness (JWEL.TO) and Interfor Corporation (IFP.TO) are also notably lower.

The Canadian central bank noted consumer price inflation remains close to 2% and the economy is in excess supply, said: "Lower interest rates are boosting household spending and, in the outlook published today, the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada's economy would be tested."

The bank added, "We will be following developments closely and assessing the implications for economic activity, inflation and monetary policy in Canada."

The central bank forecast Canadian GDP growth of 1.8% in both 2025 and 2026 following a 1.3% increase in 2024. It also said its expects consumer price inflation will be around the 2% target over the next two years.

However, the Bank of Canada noted a protracted trade conflict with the U.S. would most likely lead to weaker GDP and higher prices in Canada.