Canadian Stocks Advance Amid Buoyant Bank Results, Fed Rate Cut Expectations

(RTTNews) - Canadian stocks edged higher on Wednesday as bullish earnings by two national lenders renewed confidence among investors along with increasing expectations of a Federal Reserve rate cut next week.

After opening a little above yesterday's close, the benchmark S&P/TSX Composite Index remained volatile throughout the session before finally settling at 31,160.54, up by 111.26 points (or 0.36%%).

Seven of the 11 sectors posted gains today, with the energy sector leading the pack.

On the business front today, Royal Bank of Canada raised its quarterly dividend by 6.5% after the lender clocked record net income in the final quarter of the fiscal year with higher earnings. The fourth-quarter net income was 5.43 billion Canadian dollars or C$3.76 per share (up from C$4.22 billion or C$2.91 per share a year earlier). Adjusted per-share earnings came in at C$3.85 for the three months to October 31. Total revenue increased 14% to C$17.21 billion from C$15.07 billion last year.

National Bank of Canada reported earnings results for the fourth quarter ending October 31. For the fourth quarter, the company reported net interest income of C$1,169 million compared to C$784 million a year ago. Net income was C$1,059 million compared to C$955 million a year ago. Earnings per share was C$2.6 compared to C$2.69 a year ago. The bank announced yesterday that it was buying Laurentian Bank's retail and small business segments.

Yesterday, the Bank of Nova Scotia posted robust earnings result. Among other major banks, TD Bank, BMO, and CIBC are slated to report later this week.

The U.S. Fed is slated to announce its interest rate decision after its last meeting of the year next week.

Following recent dovish comments by several Fed officials along with the latest economic releases indicating a weaker job market, markets are pricing in around an 89.0% chance of quarter-point rate cut by the Fed.

The Bank of Canada's interest rate decision scheduled to be announced on the same day ahead when the U.S. Federal Reserve does, is now on the radar of traders.

After U.S. President Donald Trump abruptly halted trade talks with Canada, Canadian Prime Minister Mark Carney has doubledhis efforts to diversify trade relations with countries elsewhere.

The tripartite free-trade deal between Canada, United States, and Mexico (CUSMA) is coming up for review by July 2026. Canada has major stakes in how the Trump administration approaches the review.

Carney is facing pressure from the domestic front to slip in more goods under the pact while concerns arise if U.S. would withdraw from the trilateral deal itself.

Currently, barring goods that fall under CUSMA, Trump has imposed a 35% tariff which has affected the domestic business houses heavily.

Canadian steel maker Algoma Steel Group is preparing to slash around 1,000 jobs (40% workforce) and close its blast furnace in northern Ontario to pare losses due to tariffs. The steel maker's sales fell by 13% in the third quarter 2025.

Data released by Statistics Canada today revealed that Canadian business labor productivity rose 0.9% quarter-on-quarter in the third quarter of 2025 rebounding from a 1.0% decline in second quarter. Real business GDP rebounded 0.9%, reversing a 0.8% contraction in the previous quarter.

The S&P Global composite Purchasing Managers' Index (PMI) recorded 44.9 in November, down from 50.3 in October.

The S&P Global services PMI fell to 44.3 in November from 50.5 in October.

Major sectors that gained in today's trading were Energy (1.99%), Healthcare (1.66%), Industrials (1.24%), and IT (0.65%).

Among the individual stocks, International Petroleum Corp (7.74%), Tamarack Valley Energy Ltd (3.73%), Cenovus Energy Inc (3.66%), Curaleaf Holdings Inc (4.63%), and Tfi International Inc (3.23%) were the prominent gainers.

Major sectors that lost in today's trading were Real Estate (0.29%), Utilities (0.50%), Communication Services (0.77%), and Consumer Staples (1.00%).

Among the individual stocks, Allied Properties Real Estate (1.21%), First Capital REIT Units (1.21%), Empire Company Ltd (1.57%), Loblaw Co (1.39%), and Rogers Communications Inc (2.42%) were the notable losers.

Ivanhoe Mines Ltd (8.55%), Capstone Mining Corp (8.36%), and International Petroleum Corp (7.74%) were among the prime market-moving stocks today.