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Canada's main stock index climbed to an eight-day high on Tuesday, bolstered by gains in heavily weighted financial shares as anticipation builds for a Federal Reserve interest rate decision later this week, which could signal a reduction in borrowing costs in the United States.
The Toronto Stock Exchange's S&P/TSX Composite Index closed up 45.1 points, or 0.2%, at 22,824.67, marking its highest close since July 22.
Meanwhile, the S&P 500 and Nasdaq faced declines, burdened by underperformance in chip and large-cap technology shares ahead of earnings reports from key tech companies that have driven U.S. indexes higher this year.
Colin Cieszynski, chief market strategist at SIA Wealth Management, noted the contrast in market dynamics: "Today you see tech stocks getting hammered and the TSX is actually doing ok." Technology makes up only 10% of the TSX's market capitalization, compared to the 30% share held by financials.
Bond markets anticipate the Fed will maintain interest rates on Wednesday but indicate that rate cuts may be on the horizon. The Bank of Canada has already begun easing rates.
Cieszynski added, "Interest rates coming down would generally benefit bank stocks as long as it's because inflation is being managed and not due to economic instability."
The financial sector rose by 0.4%, while utilities, which include high-dividend-paying companies likely to gain from lower interest rates, increased by 0.6%.
Filo Corp (TSX:FIL) was a standout performer, with its shares surging by 8.8% following a deal in which Lundin Mining (TSX:LUN) and global miner BHP Group (ASX:BHP) agreed to jointly acquire the company. Shares of Lundin Mining fell by 2.6%.
Tilray Brands Inc also saw a 7% increase in its share price after reporting strong fourth-quarter revenue.
