[Moo Brief] Canada's first rate cut since 2020: Which sectors to invest in？

The Bank of Canada lowered its key interest rate from 5% to 4.75%, which is the first rate cut since March 2020. Governor Macklem said that as inflation gets closer to the 2% target, the bank's monetary policy can now be less stringent. The Bank of Canada will decide on interest rates again on July 24, 2024. Since the announcement, Canada's S&P/TSX Composite has risen by 0.76%.

➤ Consumer staples: individuals are more willing to consume under a low-rate environment.

➤ Technology: technology companies have lower financing costs and accelerated innovation.

➤ Materials: The materials sector benefits from increased demand for infrastructure and development.

➤ Real estate: Mortgage rates fall and the real estate market is active.

➤ Finance: Banks and financial institutions are expected to benefit from increased economic activity.

➤ High dividend ETF products: the industries to which high dividend targets belong are relatively traditional, their production and management methods are relatively mature, and their operations are stable. In 2023, coal, banking, oil and petrochemical products, household appliances, and transportation are the top five industries with the highest dividend yields for listed companies.

Regarding the prospects for the Canadian economy, Macklem also offered an optimistic comment, stating that there is room for Canada's economic growth to temporarily exceed potential levels. Even if inflation keeps declining, there is still space for development in Canada's economy due to its excess supply and there was a rise in both housing and business investment. It's anticipated that the Canadian economy will soft land. The rate of population increase won't "dramatically" differ from the Bank of Canada's projections.

On Wednesday, the S&P 500 and Nasdaq indexes both reached all-time highs. The three major U.S. market indexes closed higher on Wednesday, Eastern Time. The S&P 500 gained 1.18%, the Nasdaq climbed by 1.96%, and the Dow Jones Industrial Average increased by 0.25% as of the close. Meanwhile, with a gain of more than 5%, Nvidia maintained its record high, overtaking Apple with a total market capitalization of almost $3 trillion. Going forward, do you think the US market will profit from this wave of Canada's interest rate cuts? Canada has fired the first shot at interest rate cuts. Will the US announce a rate cut soon?