TSX Index Hits Record High on Rate Cut Optimism

TSX futures slipped after the index hit a record high due to optimism surrounding a potential rate cut by the Fed. The index rose to a second straight record high, with Cenovus Energy receiving an upgrade following the MEG Energy deal. Canadian retail sales rose in June, but the advance indicator pointed to a drop in July.

Canadian stock index futures slipped on Friday as the Toronto Stock Exchange's (TSX) S&P/TSX composite index hit a record high, driven by optimism surrounding a potential interest rate cut by the Federal Reserve. The TSX composite index ended the day up 277.70 points, or 0.99%, at 28,333.13, surpassing the record closing high it posted on Thursday. For the week, the index was up 1.53%, marking its third straight weekly gain [4].

Investors were buoyed by Federal Reserve Chair Jerome Powell's comments at the Fed's annual Jackson Hole conference, where he indicated a possible interest rate cut at the U.S. central bank's meeting next month. Powell noted that risks to the job market were rising but also acknowledged the continued threat of inflation. This signal from the Fed prompted investors to rotate out of defensive sectors into growthier areas such as energy, materials, and technology [4].

Cenovus Energy (CVE) received a significant boost following the announcement of its $7.9 billion (C$7.9 billion) cash-and-stock deal to acquire MEG Energy (MEGEF). The deal, which is expected to close by year-end, will bring about $150 million in annual cost savings and efficiencies in 2026 and 2027, and $400 million a year in 2028 and beyond. Cenovus Energy shares jumped 7.13%, while MEG's shares ended 1.23% higher [4, 5].

Meanwhile, Canadian retail sales rose in June, indicating a rebound from the previous month's contraction. Retail sales increased by 1.5% on a monthly basis to C$70.25 billion ($50.49 billion), driven by higher sales at food and beverage retailers. The advance indicator pointed to a drop in July, with Statistics Canada projecting a 0.8% decrease [2, 3].

In summary, while Canadian stock index futures slipped after reaching a record high, the TSX composite index continues to perform strongly, driven by optimism surrounding a potential interest rate cut by the Federal Reserve. Additionally, Cenovus Energy's acquisition of MEG Energy has been well-received by investors, and Canadian retail sales showed signs of recovery in June.

References:
[1] https://www.ainvest.com/news/stock-futures-rebound-powell-speech-cenovus-energy-rises-meg-acquisition-deal-2508/
[2] https://ca.finance.yahoo.com/news/canadas-retail-sales-rebound-june-130329920.html
[3] https://www.tradingview.com/news/reuters.com,2025-08-22:newsml_SCLMJELP5:0-canada-june-retail-sales-grow-1-5-seen-down-0-8-in-july/
[4] https://ca.finance.yahoo.com/news/tsx-futures-steady-eyes-powells-101555841.html
[5] https://seekingalpha.com/article/4816300-cenovus-energy-thanks-for-paying-in-cash