Canadian Stocks Surge Amid Increasing Rate Cut Expectations

(RTTNews) - Canadian stocks surged on Friday as expectations of a rate cut this month by central banks in Canada and the U.S. increased as available jobs data in both nations show declining momentum.

After opening much higher than yesterday's close, the benchmark S&P/TSX Composite Index traded firmly positive throughout the session to reach an intraday high of 30,490.04 before finally closing at 30,471.68, up by 311.09 points (or 1.03%). Notably, today's close is a record high for the index.

Nine of the 11 sectors posted gains today with IT sector leading the pack.

The U.S. government shutdown - which is the 15th shutdown since 1981 - enters its third day today. As the shutdown inhibits key economic data releases, the non-farm payrolls report supposed to be released today was held up.

In the U.S., data from the Institute for Supply Management revealed that the Services PMI fell to 50 in September from 52 in August and the Business Activity Index dropped to 49.9 in September 2025 from 55 in August.

The Employment Index rose to 47.2 in September 2025 from 46.5 in August. Though less intense than prior month, this is the fourth consecutive month of job shedding. Previously released ADP data also showed that job market is losing momentum.

As private data hint at a sluggish job market, expectations for another rate cut by the U.S. Federal Reserve this October and possibly another in December are gathering steam.

The central banks of Canada and the U.S. are both due to announce their interest rate decisions on October 29.

On the Canadian economic front, the S&P Global Canada Composite PMI recorded 46.3 in September, down from 48.4 in August, marking the 10th consecutive monthly contraction in private sector activity. Both the manufacturing (47.7 versus 48.3) and services (46.3 versus 48.6) sectors declined at a faster rate.

The S&P Global Canada Services PMI fell to 46.3 in September 2025 from 48.6, marking the third straight contraction

As data in Canada mirrored the employment situation in the U.S., calls for another rate cut by Bank of Canada are also getting louder.

Meanwhile, Canadian Prime Minister Mark Carney is travelling to the U.S. on the evening of October 6 and meeting with U.S. President Donald Trump on October 7.

Both nations are preparing for the first joint review of the Canada-United States-Mexico Agreement (CUSMA). Of note, Canada and the U.S. launched consultations last month to help shape their negotiating positions.

More than 75% of Canada's exports go to the U.S. Canada is the top export destination for 36 U.S. states. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day.

Of late, Trump-imposed 35% tariffs on Canadian exports have hit the steel, aluminum, and automobile industries badly leading to job losses in those sectors.

The validity of Trump's tariffs are bound to undergo legal scrutiny by the U.S. Supreme Court, starting in November.

So far, no significant breakthrough has been seen in the Canada-U.S. negotiations on tariffs and officially, there is no confirmation if tariff would be a topic in the upcoming discussion of both premiers.

On the monetary front, the Bank of Canada is also considering changes to how it measures its preferred inflation metrics. BoC Deputy Governor Rhys Mendes stated that as inflation is becoming more volatile, assessing underlying inflation has to undergo a new approach.

Major sectors that gained in today's trading were IT (1.45%), Industrials (1.09%), Energy (1.04%), and Real Estate (0.95%).

Among the individual stocks, Shopify Inc (6.46%), Pembina Pipeline Corp (6.03%), Constellation Software (3.27%), Bitfarms Ltd (2.69%), Nfi Group Inc (2.34%), and Vermillion Energy Inc (5.52%) were the prominent gainers.

Major sectors that lost in today's trading were Materials (0.38%), Consumer Staples (0.19%), Communication Services (0.10%), and Healthcare (1.01%).

Among the individual stocks, Seabridge Gold Inc (2.79%), Wesdome Gold Mines Ltd (2.00%), Metro Inc (0.48%), Rogers Communications Inc (1.30%), and Curaleaf Holdings Inc (4.10%) were the notable losers.