The Globe and Mail reports in its Wednesday edition that Canada's main stock market index is approaching a record high. The Globe's David Berman writes that in a curious twist, that rally is being driven by simmering concerns about a weaker global economy. The S&P/TSX Composite Index is now just 132 points, or 0.8 per cent, below the record set in April. Since the start of the year, the index is up 15.5 per cent. All 11 of the index's sectors have contributed to the gains in 2019, suggesting a widespread rally. There are, however, clear differences beneath the surface. Financials and energy stocks, which are closely associated with rising economic activity and strong oil prices, have been lagging the broader index with gains of 12.6 per cent and 8.2 per cent, respectively. Conversely, utilities, consumer staples, real estate investment trusts and materials have been leading the rally. Gold producers, which reside within the materials sector, have surged 33.2 per cent this year. Clearly, financial markets expect that central banks will be cutting rates. But the Canadian stock market index cannot thrive on gloom alone, given its heavy exposure to economically sensitive financials, energy stocks and industrials.
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