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Canada's main stock index dropped 300 points at midday, hit by tech losses, but defensive sectors like telecoms and utilities held firm and helped steady the ship.
What does this mean?
The Toronto Stock Exchange has slipped into the red, mainly dragged down by a 4.8% slide in tech shares - a reaction to worries over tighter AI oversight. But defensive stocks like telecoms and utilities bucked the trend, rising 0.7% and 1%. Standouts like Algonquin Power & Utilities even surged 9% after announcing better-than-expected earnings, showing that investors are leaning towards firms with stable dividends during choppy markets. On the economic front, TD Economics reported a gain of 67,000 jobs in October, mostly in the private sector, which partly offsets job losses but doesn't change the picture for unemployment - it's still up from last year, and wage growth is softer than in 2024. All this has convinced the Bank of Canada to hold rates steady, letting previous cuts work through the economy as global trade tensions and softer domestic momentum play out.
With tech under pressure and AI regulation stirring nerves, investors are searching for safety in telecommunication and utility stocks. These sectors are attracting fresh interest, especially after upbeat results like Algonquin's. As momentum for additional rate cuts stalls, the market's attention is shifting from high-octane growth to companies that can offer steady earnings and dividends, particularly as central banks caution against easing policy too quickly.
The bigger picture: Economic resilience meets cautious central bankers.
October's job gains suggest Canada's economy still has some spring in its step despite global headwinds from US trade moves and persistent supply chain snags. But with unemployment creeping higher and data bouncing around, a full recovery looks slow. The Bank of Canada is betting softer growth will bring down inflation on its own, sticking with its wait-and-see stance on interest rates - and that cautious approach could stick until something major shakes things up.