The S&P/TSX Composite Index On Tuesday, July 19, the index gained 342 points. Since the spring season, stocks in North America and Canada have been in a steady decline. But, the decline has largely halted since May’s first half. Canada’s energy-rich index has helped to support the economy. This has been possible because of low oil and gas prices. Today I’d like to talk about three things investors should keep an eye on when the TSX opens the trading session on July 20, 2017. Let’s jump in.
In recent trading sessions, TSX technology stocks have rebounded
Energy stocks may have provided much-needed support, but Canada’s technology sector has been throttled during this slump. Shopify Since its 2015 debut, it has become one of the greatest tech success stories. It has experienced a price drop that has been compared to Nortel’s collapse. As of July 19, shares of this tech stock had plunged 77% year-over-year.
There are positives in the tech sector on the TSX at the moment. BlackBerry As of July 19, the stock has risen 6.9% week-over-week. The stock has increased 12% month-over-month. This company is promising exposure to areas like automotive software and cybersecurity. But it faces increasing competition in those areas.
BlackBerry is not the same as BlackBerry Kinaxis is a leader in its sector. This Ottawa-based company provides supply chains solutions software to a vast global client base. This tech stock has seen a 19% increase in shares over the past month. Kinaxis is still one of my favorite targets if the Canadian tech sector can sustain its rebound.
Inflation’s ongoing effects
Experts were surprised by the Bank of Canada’s (BoC), a significant 1% increase in its interest rate. It was more than expected. Policymakers have made it clear that they are committed to battling Canada’s increasingly high inflation rate. The BoC predicted recently that inflation would stay around 8% or higher for the next few months. Canadian consumers will feel the pinch.
Investors should look for TSX stocks which can thrive in an inflationary environment. The rise in food prices has created attractive sales growth opportunities for food retailers. Loblaw The country’s largest grocery retailer. Revenue grew 3.3% to $12.2B in the first quarter 2022. In the meantime, adjusted EBITDA increased 10% year over year and reached $1.34 billion.
Inflation has been driven by gas price increases in the last few months. Top energy stocks such as BP and BG should be attractive to investors. Suncor (TSX:SU)(NYSE:SU). As of July 19, 2022, shares of this TSX stock had risen 23%. The stock is currently down 12% from month to month.
This stock has a very attractive price to earnings ratio of 9.5. It pays a solid 4.5% dividend, with a $0.47 share dividend.
Is it possible that interest rate increases are already priced into the TSX?
The past decade has seen North American and Canadian markets enjoy historically low interest rates, aggressive asset purchases programs, and a flurry of other financial services. Despite this, markets did not seem to be affected by the huge rate hike last Wednesday. Investors should be attracted to undervalued equities listed on the TSX, since interest rate hikes might have been largely priced in by this point.
Profit machines are one example of these undervalued equities. TD Bank And Royal Bank. Higher interest rates can limit credit growth. However, top banks will see their profit margins increase in the near future.