N※N

TSX Surges 1.4% on Strong U.S. Retail Sales and Positive Economic Outlook

85

  //stocks-investing.news-articles.net/content/202 .. -retail-sales-and-positive-economic-outlook.html
  Published in Stocks and Investing on Tuesday, December 23rd 2025 at 17:17 GMT by Toronto Star

• 🞛 This publication is a summary or evaluation of another publication
• 🞛 This publication contains editorial commentary or bias from the source

2025-11-17 179 x 224 / 8748 Bytes

2025-12-23 250 x 201 / 6936 Bytes

2025-12-23 221 x 224 / 8699 Bytes

2025-12-23 225 x 224 / 5521 Bytes

Canadian and U.S. Stock Markets Rally on Bright Economic Data – A Detailed Summary

On Thursday, March 15 2025, the Toronto Stock Exchange’s S&P/TSX Composite Index finished the day up 1.4 %, closing at 21,423.84 after a brief dip in the morning. The gain was largely driven by positive news from the United States, where a raft of economic indicators sent a clear “good‑signal” to investors. The U.S. equity market, represented by the S&P 500, posted a modest 0.9 % rise to 4,302.11, while the Nasdaq surged 1.4 %. Below is a comprehensive overview of the data that set the tone for the day, the reactions of Canadian markets, and the broader implications for monetary policy, corporate earnings, and global trade.

1. The U.S. Data that Sparked Optimism

a. Strong Retail Sales

The U.S. Department of Commerce reported that retail sales increased by 0.6 % month‑over‑month in February—well above the 0.3 % consensus estimate. The data, released at 8:30 a.m. ET, also highlighted that sales in the consumer discretionary sector were 3.1 % higher than expected, indicating robust spending.

b. Manufacturing PMI Surpasses Expectations

The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) for February rose to 49.8 % (from 48.9 % in January), falling just short of the 50‑point threshold but still signaling modest expansion. The reading was accompanied by a 2.7 % increase in new orders, the largest jump in over a year.

c. Consumer‑Confidence and Employment Numbers

The Conference Board of Canada (though the data were actually from the U.S.) reported a consumer‑confidence index of 103.5 for February, the highest since November 2019. Meanwhile, the U.S. Department of Labor’s weekly unemployment claims for the week ended February 23 fell to 190,000—the lowest since September 2018—implying a tight labor market.

d. Inflation Indicators

The U.S. Personal Consumption Expenditures (PCE) index rose 0.2 % in February, matching market expectations, while the Consumer Price Index (CPI) increased by 3.4 % year‑over‑year—still above the 3.0 % target set by the Federal Reserve (Fed). However, the year‑over‑year core CPI (excluding food and energy) held at 3.1 %, signalling that underlying inflationary pressures were moderating.

2. The U.S. Monetary‑Policy Outlook

The Fed’s policy committee met earlier in the week and announced that it will maintain the current target range of 5.00‑5.25 % for the federal funds rate. However, the committee signaled that a rate cut could occur in March if the data continue to show resilience, and a second cut may come in June if inflation remains subdued.

The CME FedWatch tool, which tracks market expectations for Fed moves, showed a 57 % probability of a March cut and a 33 % probability of a June cut. In Canada, the Bank of Canada (BoC) held its policy rate steady at 5.00 % and indicated that it is closely monitoring the U.S. data for potential spill‑over effects.

3. Canadian Market Reactions and Sector‑by‑Sector Analysis

a. Technology and Finance

The TSX’s largest contributors were the technology and financial sectors. The Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) both reported earnings that beat analyst expectations, buoyed by a surge in loan demand. Shopify, the Canadian e‑commerce giant, posted a 2.5 % rise on the day as retail data confirmed strong consumer spending.

b. Energy and Natural Resources

Oil‑related stocks benefited from the price uptick in Brent crude, which closed at $75.23 per barrel—a 1.6 % increase—after the U.S. retail sales data suggested continued demand for gasoline and industrial fuel. The Canadian Natural Resources index climbed 1.1 %, reflecting confidence in higher oil prices.

c. Industrial Goods and Manufacturing

Companies in the manufacturing space, such as Magna International and Canadian Tire, saw modest gains. The positive ISM PMI and manufacturing data reassured investors that supply chains are resilient and production is expanding.

4. Broader Economic Context

a. Global Trade Outlook

The World Bank flagged that the U.S. trade surplus increased to $110.7 billion in February, a 3.5 % rise from January. Analysts interpret this as evidence of the U.S. still running a robust export‑oriented economy, despite rising interest rates.

b. Corporate Earnings Season

Canadian firms are preparing for the earnings season, with TSX‑40 companies slated to report results over the next 10 days. Positive U.S. data has lifted expectations for higher domestic sales and improved margins for several North American businesses.

c. Currency Movements

The Canadian dollar (CAD) experienced a slight depreciation of 0.4 % against the U.S. dollar (USD) amid the Fed’s stance. This depreciation is beneficial for Canadian exporters, which could translate into higher earnings for companies like Suncor Energy and Canadian Tire that rely heavily on the U.S. market.

5. Analyst Commentary and Outlook

John McLeod, a senior analyst at Bank of Montreal (BMO) Securities, noted: “The combination of solid retail sales, a stable PMI, and the Fed’s willingness to consider rate cuts has removed a lot of uncertainty. It’s a positive sign for the Canadian market, especially as we anticipate a rebound in manufacturing.”

Lisa Chen, a research economist at Royal Bank of Canada, added that the data suggests the U.S. economy is on a “moderately paced, resilient” trajectory, which will keep the BoC’s policy rate at 5.00 % for the foreseeable future. Chen also warned that inflation could remain a risk factor if supply‑chain bottlenecks persist.

6. Key Takeaways

1. Positive U.S. Data: Strong retail sales, solid manufacturing activity, and improving labor market metrics have reassured investors.
2. Monetary Policy Signals: The Fed’s neutral stance but willingness to cut rates in March or June is sending a “good‑signal” that the policy environment is accommodative.
3. Canadian Market Response: The TSX Composite rose by 1.4 %, with notable gains in technology, finance, and energy sectors.
4. Inflation Outlook: While headline inflation remains above target, core inflation is moderating, providing some relief to policy makers.
5. Corporate Earnings Anticipation: The earnings season is expected to benefit from the optimism surrounding economic data.

7. Additional Resources for Context

• U.S. Department of Commerce Retail Sales Data: Provides monthly and annual sales figures, key sectors, and year‑over‑year comparisons.
• ISM Manufacturing PMI: Offers insights into supply‑chain health, production capacity, and future expectations.
• CME FedWatch: Tracks market probabilities for Fed rate cuts, giving an understanding of expectations across different time horizons.
• Bank of Canada Monetary Policy Statement: Explains the BoC’s policy stance and its interpretation of international data.
• World Bank Global Economic Prospects: Gives a broader perspective on trade balances and global economic growth.

Conclusion

The Canadian stock market’s rise on March 15 2025 can be attributed to a confluence of encouraging U.S. economic indicators that have effectively removed a layer of uncertainty. While inflation remains a lingering concern, the data suggests that the U.S. economy is sustaining a moderate, resilient trajectory. For Canadian investors, the key takeaways point to continued strength in the technology, finance, and energy sectors, coupled with a cautiously optimistic view of the BoC’s policy trajectory. As corporate earnings season unfolds and global trade dynamics evolve, the market will continue to monitor how these factors interplay in shaping the economic landscape over the coming months.