TSX Extends Winning Streak as Defensive Sectors Shine

Canada’s S&P/TSX Composite Index continued its upward trend for the third consecutive day, rising 0.4% to 35,649.51. Utilities and telecom stocks led the gains, climbing 1.3% and 1.1% respectively, while industrials and energy sectors faced declines of 0.7% and 0.6%. This shift in sector performance reflects a broader economic context influenced by recent trade and business activity data.

Statistics Canada reported that the merchandise trade surplus expanded to CA$4.2 billion in August, up from CA$787 million in July. This growth was driven by a 2.5% increase in exports and a 2.0% decrease in imports. Trade with the US played a significant role, with exports to the US surging 8.1% and imports falling 2.5%, boosting Canada’s surplus with the US to CA$11.2 billion from CA$6.1 billion. This surge may be linked to shipments accelerated before new US tariffs took effect at the end of August.

Meanwhile, the Ivey PMI cooled to 58.2 in September from 64.3, but the Ivey Price Index increased to 82.8 from 80.4, indicating a mix of easing growth and persistent inflation. This scenario complicates expectations for the Bank of Canada’s rate cuts, as inflation may not be easing as rapidly as economic activity.

The current market environment favors defensive sectors like utilities and telecom, which offer steadier cash flows amid policy uncertainty. Conversely, economically sensitive sectors such as industrials may face challenges as day-to-day TSX leadership becomes more influenced by shifts in Canada’s rate-cut expectations rather than commodity prices like oil.