TORONTO — Canada's main stock index finished higher on Wednesday, helped by strength in consumer cyclicals, while U.S. stock markets also rose as investors see more clarity on trade.
Philip Petursson, chief investment strategist at IG Wealth Management, said Wednesday’s trading session was an extension of what has occurred for the past couple of weeks.
“A lot of the volatility that was triggered from the uncertainty around tariffs earlier in the year, let's say January through the beginning of April, has largely dissipated,” Petursson said.
He said markets can now guess what the outcome will be, “which is a deal with an existing tariff of somewhere between 10 and 20 per cent, depending on the country.”
“If that's the known factor and we know that it's the consumer or the importer that bears the brunt of it, now you can quantify that and you can factor it in, and it doesn't lead to the disastrous outcome that perhaps was believed earlier in the year,” he said.
The S&P/TSX composite index was up 72.17 points at 27,993.43.
In New York, the Dow Jones industrial average was up 463.66 points at 44,922.27. The S&P 500 index was up 20.82 points at 6,466.58, while the Nasdaq composite was up 31.24 points at 21,713.14. The S&P 500 rose 0.3 per cent, coming off its latest all-time high, while the Nasdaq composite added 0.1 per cent to its own record set the day before.
Petursson said he thinks the markets rally “has not exhausted itself” and has room to continue.
“We just came through an earnings season that I think the results speak for themselves. You had 81 per cent of companies surprise to the upside -- that is above average,” he said.
During the earnings season, Petursson noted profit margins expanded alongside year-over-year earnings growth.
“There are more reasons to like this rally than to be cautious in this rally.”
On Wall Street, the hopes for lower interest rates are helping to drown out criticism that the U.S. stock market has grown too expensive after its big leap since hitting a low in April.
U.S. Treasury yields eased in the bond market as expectations reached a virtual consensus that the U.S. Federal Reserve will cut its main interest rate for the first time this year at its next meeting in September.
Petursson said there is about a 90 per cent probability being priced into futures markets of a rate cut from the U.S. central bank in September.
“It's attractive for stocks. It's good for stocks, it's good for valuations, it's good for profits going forward if credit costs move lower, and I think that in general is what the market has been reacting on and perhaps is reacting to today,” he said.
Petursson noted much of the gains on the TSX were driven by the consumer cyclicals sector.
“I would say in general, it seems the more defensive sectors aren't participating, or we’re getting a rotation out of defensives into more cyclicals. That is what I've seen today, but I think that's been the case for the past little while,” he said, adding he expects the rotation to continue.
Within the cyclicals sector, shares of Gildan Activewear Inc. gained nearly 12 per cent on the day after it announced a US$2.2 billion deal to purchase HanesBrands Inc.
“What I think is interesting about this deal is that typically the acquirer's stock goes down with the announcement. In this case, the street is viewing this as a very strong positive and very accretive to Gildan, and I think that's a good thing,” Petursson said.
The Canadian dollar traded for 72.64 cents US compared with 72.60 cents US on Tuesday.
The September crude oil contract was down 52 cents US at US$62.65 per barrel. The December gold contract was up US$9.30 at US$3,408.30 an ounce.
This report by The Canadian Press was first published Aug. 13, 2025.
— With files from The Associated Press
Companies in this story: (TSX:GSPTSE, TSX:CADUSD, TSX: HBM, TSX: GIL)
Daniel Johnson, The Canadian Press
