Predicted to hit record high in 2024
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Published Feb 22, 2023 • Last updated 3 days ago • 2 minute read
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The TSX on a business news ticker in the Financial District in Toronto. Photo by Cole Burston/The Canadian Press files TORONTO — Canada’s main stock index will add to its rally this year and hit a record high in 2024 as the Bank of Canada turns less hawkish and China’s reopening boosts demand for commodities, a Reuters poll found, but the upswing will be less than previously thought.
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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors The median prediction of 21 portfolio managers and strategists in the Feb. 10-21 Reuters poll was for the S&P/TSX composite index to advance 6.2 per cent to 21,500 by the end of 2023, compared with 22,000 expected in the previous poll in November.
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It was then expected to climb to 22,500 by mid-2024, moving past the record closing high it set last March of 22,087.22, but less than November’s forecast of 23,000.
The composite index has given up some of its gains in recent days, but is still up 4.5 per cent since the start of 2023.
“Equity markets have exhibited remarkable resilience, climbing a wall of worry toward higher common stock prices,” said Brandon Michael, senior investment analyst at ABC Funds.
“The main drivers toward higher stock prices include decelerating inflation, central banks easing up on their monetary policy tightening efforts, and improving investor risk appetite.”
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The Bank of Canada last month became one of the first major central banks to signal a pause in its tightening campaign, saying it will take time to assess how well interest rate increases are working to lower inflation.
Canada’s annual rate of inflation cooled to 5.9 per cent in January after peaking at 8.1 per cent in June, data on Tuesday showed.
“My expectations for this year are founded on an expectation that a reopening in China should see its demand for materials rebound, boosting commodity prices and resource stocks,” said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc.
The energy and materials sectors combined account for about 30 per cent of the Toronto market’s weighting. Oil has climbed nine per cent since December when China abandoned its zero-COVID policy and reopened its economy.
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“We expect a correction in the near term as the year-to-date rally in global equities has been disconnected from a realization, better reflected in fixed income markets, that (interest) rates will need to stay higher for longer,” said Chhad Aul, chief investment officer and head of multi-asset solutions at SLGI Asset Management Inc.
Canada’s five-year yield has surged about 80 basis points since mid-January to 3.59 per cent, tracking the upswing in U.S. Treasury yields.
© Thompson Reuters 2022