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If you steer clear of resource stocks, it’s a great time to own a Canadian company. A weak loonie and lower fuel prices are propping up the bottom line for everyone from retailers to transport companies in Canada, economists say.
“It’s obviously very bad news for the energy sector and a few provinces, but it’s actually pretty good news for everyone else,” said Robert Kavcic, senior economist at BMO Capital Markets. “Especially in manufacturing and areas like consumer spending — you’re basically getting a tax cut across the board.”
The favourable climate for a lot of Canadian companies is easy to overlook because of how bad this year has been for resource companies, which account for a big chunk of the country’s economy.
Energy companies make up one-third of the Toronto Stock Exchange and they are reeling from a collapse in oil prices. Similarly, gold companies, a sizable portion of the important materials sector, are cutting guidance as the precious metal approaches price levels that are dangerously close to the break-even point for many miners.
The commodity price rout has weighed heavily on the TSX, which is now down 7% since its early September highs.