Bets on Canada Rate Cut Bring Hope for Lagging Bank Stocks
- More Bay Street traders are pricing in a June rate cut
- Banks would see margin relief, improving economic outlook
Scotiabank’s headquarters in the financial district of Toronto.
Photographer: Chloe Ellingson/BloombergThis article is for subscribers only.
Investors up and down Toronto’s Bay Street are increasingly betting on a June rate cut in Canada, potentially giving a boost to Canada’s long-suffering bank stocks.
The S&P/TSX Banks index has gone up just 0.9% this year, compared with a 6.7% gain for Canada’s benchmark S&P/TSX Composite, amid concern that a combination of high interest rates, a wave of mortgage renewals, and rising loan losses will challenge the group. The dynamic isn’t new — over the past five years the banks index has gained 19%, about half of the 37% surge of the broader Canadian stock gauge.