China's rapid reopening is likely to fuel demand for commodities produced in abundance by Canada, potentially helping Canada's economy avoid a recession as long as it does not also force up inflation and spur further interest-rate hikes.
"We are really seeing China roaring back with expected growth, liquidity and fiscal spending accelerating from here, with the Canadian dollar and Canadian stocks being major beneficiaries," said Joseph Abramson, co-chief investment officer at Northland Wealth Management.
, which has a roughly 30% weighting in energy and mining stocks, is up nearly 8% while the loonie has gained 1.8% against the U.S. dollar. Canada has the world's third-largest reserves of oil , which climbed as much as 17.9% since China began relaxing its restrictions in December before giving back much of those gains.
"If it's primarily services that are driving the rebound from the relaxation of restrictions, maybe you don't get that explosive oil input-cost pressure across the world," said Derek Holt, head of capital markets economics at Scotiabank.
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