Canadian Stocks Rally as U.S. Shutdown Nears Resolution
Canada’s main stock index jumped over 1% as optimism grew around a potential end to the U.S. government shutdown and rising commodity prices boosted mining shares.
Global Optimism Lifts Canadian Markets
Canada’s main stock index surged on Monday, lifted by renewed confidence across global markets as Washington edged closer to ending the longest government shutdown in U.S. history. Strength in gold and copper prices added momentum, helping the benchmark post its best level in more than a week.
At 10:01 a.m. ET, the S&P/TSX Composite Index climbed 1.1% to 30,228.45, rebounding from two weeks of declines. The rally marked a strong comeback after recent weakness tied to fading enthusiasm for AI-related stocks and investor unease over Prime Minister Mark Carney’s first federal budget.
Shutdown Deal Sparks Global Risk Appetite
The rebound came as global equities rose in unison after the U.S. Senate advanced a bipartisan measure aimed at reopening the federal government. The proposal would end the 40-day shutdown, the longest in U.S. history, and provide funding through January 30, pending final approval from both chambers of Congress.
Investors took the development as a sign that political gridlock may soon ease, restoring confidence in global risk assets. Markets responded positively across major sectors, with investors rotating back into cyclical and commodity-driven stocks.
“Hints that the stalemate in Washington could finally break have buoyed sentiment across global markets,” said Russ Mould, investment director at AJ Bell. “Even a glimmer of progress in ending the shutdown was enough to put traders in a buying mood.”
Gold and Mining Stocks Lead the Charge
Mining shares led the rally on the Toronto Stock Exchange as precious metals surged. The S&P/TSX Global Gold Index advanced 4.13%, driven by a 2% rise in gold prices, which hit a two-week high.
The gains followed weaker U.S. economic data that strengthened expectations for a Federal Reserve rate cut next month, a move that typically benefits non-yielding assets like gold.
The base metals sub-index also saw strong momentum, climbing 3.66%, after copper prices rose 1%. Optimism over the potential end of the U.S. shutdown and new data showing deflation easing in China, the world’s largest consumer of copper, boosted demand for industrial metals.
Silver Stocks Shine with Multi-Year Highs
Silver producers were among the day’s standout performers.
Discovery Silver Corp. (DSV.TO) surged 16.06%, reaching a 16-year high, while Endeavour Silver (EDR.TO) gained 13.35%. Their rally mirrored a 3.4% jump in silver prices to $49.95 per ounce, the highest since October 21.
The move reflected both improving global risk appetite and renewed investor interest in hard assets amid ongoing inflation uncertainty.
Barrick Mining Beats Estimates
In corporate news, Barrick Mining (ABX.TO) shares climbed 6.18% after the company topped third-quarter earnings estimates. Stronger gold prices helped offset a modest decline in production, reinforcing the broader trend of mining strength driving Canada’s equity markets higher.
The company’s performance underscored how the recent upswing in commodity prices has provided a cushion for resource-heavy economies like Canada’s, which remain sensitive to global demand cycles and U.S. policy developments.
Investor Sentiment Rebounds After Rough Weeks
The Monday rally offered a welcome relief for Canadian investors after two consecutive weeks of declines. Last week’s 1.15% drop in the S&P/TSX Composite Index reflected waning momentum in AI-linked stocks and muted reactions to the federal budget.
Monday’s gains helped restore confidence in cyclical sectors, signaling that investor appetite for risk is improving as global uncertainties, particularly in the U.S. political sphere, begin to ease.
Economic Outlook: Watchful Optimism Ahead
While the rebound reflects improving short-term sentiment, analysts caution that volatility could return if the U.S. Congress fails to finalize the spending deal or if inflation data surprises on the upside.
For now, Canada’s market appears well-positioned to benefit from a recovery in global commodity prices and a potential shift in central bank policy toward easing, should growth concerns deepen.
The Bank of Canada is also expected to monitor developments closely, as a softer U.S. dollar and stable inflation could support domestic exports, particularly in mining and energy.
Relief Rally May Signal a Turning Point
Monday’s strong performance on the Toronto Stock Exchange highlighted how closely tied Canadian markets remain to U.S. fiscal and political developments. With Washington seemingly nearing a compromise and commodity prices firming, investors are once again finding reasons for optimism.
If the shutdown resolution holds and central banks pivot toward supportive policy, Canada’s resource-driven index could see further upside in the weeks ahead.
(Disclaimer: This article is based on verified market data and official statements available at the time of publication. It is intended for informational purposes only and should not be construed as financial advice.)
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