One portfolio manager says bank earnings are supporting Canada’s benchmark index.
Earlier this month, the S&P/TSX Composite Index reached record highs, closing at 25,897.48. Early afternoon Wednesday, the TSX was trading slightly lower at 26,247.25. Ryan Bushell, CEO and portfolio manager at Newhaven Asset Management, said in an interview with BNN Bloomberg Wednesday that some of Canada’s largest lenders have posted decent results this week.
On Wednesday, National Bank and BMO Financial Group reported second quarter earnings, while TD Bank reported last week.
“All the banks so far (have posted) pretty solid results, not spectacular, but solid,” he said. Bushell added that earlier this year there was confusion surrounding how tariffs might impact the Canadian economy.
“But we’ve seen, with the rate cuts that have come through, and the capital market side of the business has been strong, the retail banking side continues to be strong, no problems there yet. And then the capital market side is humming along nicely with the renewed interest in the TSX. So pretty good story for the banks for the first half. We’ll see how the second half goes.”
Bushell said that there has been a great deal of interest in the TSX at the current moment, particularly in the resources and gold sectors.
“So, more deals, more investment banking deals, you’ve seen all the banks, pretty much the capital markets results have been pretty spectacular. So that’s pushing the earnings side,” he said,
Amid ongoing trade tensions, he said U.S. tariffs are likely to have some impact on the TSX, but it is difficult to speculate.
Given the current circumstances, Bushell said he thinks the “highwater mark” of the U.S. tariff regime has been reached. Going forward he said tariffs will settle somewhere in between the high-water mark and previous global order.
“The reality will probably not match the worst of the threats. However, there will be something. And so I think we all need to be prepared for that, and it’s going to hit different industries in different ways,” he said.
