The Toronto Stock Exchange has seen its biggest gains since May

What is going on here?

Toronto Warehouse The S&P/TSX composite stock index rose 1.4% to close at 21,848.59, the biggest gain since May. Monday’s gain of 293.73 points helped the index rebound after five consecutive weeks of declines.

What does it mean?

The price-to-earnings ratio on the TSX is at an attractive level of 14.3, significantly lower than 22.4 on the US S&P 500, making Canadian stocks more attractive to investors. Sectors such as energy and utilities led the gain, with energy rising 3.4% as the price of oil rose to $81.63 a barrel. The utilities sector grew 2.4%, boosted by strong levelsdividend shares that could use the potential interest interest rate cuts by the Bank of Canada. Materials, financials and real estate also posted strong gains, while the technology sector lagged, falling 0.6% due to weak U.S. chip stocks.

Why should I care?

For markets: Sector rotation revitalizes the TSX.

Investors have begun to shift their holdings from technology stocks to more attractive valuations of resource- and interest-rate-sensitive stocks. This shift is generating gains in the energy, utilities and materials sectors, positioning the TSX for potential future growth as these sectors benefit from rising commodity prices and favorable economic conditions.

Larger image: Economic resilience among inflation worries.

Bank of Canada Governor Tiff Macklem stressed there is enough slack in the labor market to support economic growth and job creation, even with moderate inflation. This indicates a stable economic environment conducive to business expansion and investment, which, combined with sector rotation, puts TSX in a favorable position compared to other global competitors.