TSX Ends Modestly Higher After BoC Rate Decision

(RTTNews) - The Canadian market closed higher on Wednesday, lifted by gains in energy, materials and consumer staples sectors. The mood remained largely cautious with investors digesting the Bank of Canada and the Federal Reserve's interest rate decisions.

Despite the Canadian central bank's decision to lower interest rates by 25 basis points, the mood remained cautious on concerns about the Trump administration's tariff threats, and uncertainty surrounding its trade and economic policies.

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.

The benchmark S&P/TSX Composite Index settled higher by 53.85 points or 0.21% at 25,473.30. The index dropped to 25,361.26 after the Fed announced its monetary policy, but regained lost ground subsequently.

Celestica Inc (CLS.TO) climbed 6.5%, lifted by the company's strong revenue growth in 2024.

Tenaz Energy Corp (TNZ.TO) gained about 5.4%. MAG Silver Corp (MAG.TO), Rogers Communications (RCI.A.TO), MEG Energy Corp (MEG.TO), Capital Power Corporation (CPX.TO), Metro Inc (MRU.TO), Pan American Silver Corp (PAAS.TO), Cameco Corporation (CCO.TO) and First Quantum Minerals (FM.TO) closed higher by 3 to 4.5%.

Bausch + Lomb (BLCO.TO), Hut 8 Corp (HUT.TO), Precision Drilling Corporation (PD.TO), iA Financial Corporation (IAG.TO) and Gibson Energy (GEI.TO) also ended sharply higher.

MDA Space (MDA.TO) tanked nearly 10%. Kinaxis Inc (KXS.TO), Canada Goose Holdings (GOOS.TO), Dayforce Inc (DAY.TO), Propel Holdings (PRL.TO), Aritzia Inc (ATZ.TO), goeasy (GSY.TO), E-L-Financial Corporation (ELF.TO), BRP Inc (DOO.TO) and Tecsys (TCS.TO) lost 2 to 4.3%.

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.