A sign displaying information about Toronto Stock Exchange (TSX) stocks is seen in Toronto June 23, 2014. Canada’s main stock market index was little changed on Monday as weakness in financial and energy stocks offset gains in the sector materials. REUTERS/Mark Blinch

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TORONTO, Aug 24 (Reuters) – Canada’s main stock index is expected to rise through the end of the year and then near a record high in 2023 as high commodity prices support corporate earnings. resources and despite the risk of another sell-off, a Reuters poll found.

The median prediction of 24 portfolio managers and strategists surveyed Aug. 9-23 was that the S&P/TSX Composite Index (.GSPTSE) would rise 2% to 20,375 by the end of this year from the close of Monday of 19,974.92.

Although this is well below the 21,183 year-end forecast from the May poll, the index is then expected to climb to 22,000 by the end of 2023, putting it a hair’s breadth from its closing record of 29 March at 22,087.22.

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“The outlook for the remainder of 2022 is encouraging given the expected contribution from the energy sector, financials and the overall valuation of the S&P/TSX Composite Index,” said Philip Petursson, chief investment strategist. investments at IG Wealth Management.

“The strength in oil and commodity prices in general heading into 2023 should continue to be positive for the index.”

Oil has retreated from the highs seen in March but is still up almost 20% since the start of the year. Together, the energy and materials sectors represent 29% of the market capitalization of the TSX.

Still, the Toronto market has not escaped the volatility that has rocked financial markets this year as central banks broadly tighten monetary policy to combat soaring inflation.

The index has rebounded nearly 10% since its July low, but is still down nearly 6% since the start of 2022.

Since March, the Bank of Canada (BoC) has raised its benchmark interest rate by 225 basis points to 2.50%, including a one percentage point move in its latest policy decision in July, the most significant increase by a G7 country in this economic cycle. Read more

“Signs of slowing inflation are prompting the BoC to slow the pace of tightening, but we don’t think the path is clear yet,” said Angelo Kourkafas, investment strategist at Edward Jones.

“Further rate hikes will continue to create strong headwinds for consumer spending, the housing market and economic growth through the rest of the year.”

Most investors who answered a separate set of questions expected volatility to increase over the next three months and saw the odds of another sell-off as high or very high.

“I’m not in the core recession camp, but the risks are obvious,” IG’s Petursson said. “If we continue to see deteriorating economic conditions, earnings downgrades won’t be too far off.”

(Other stories from the Reuters Q3 Global Stock Market Poll Brief:)

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Reporting by Fergal Smith; additional polling by Sujith Pai, Mumal Rathore and Sarupya Ganguly in Bengaluru; Editing by Bernadette Baum

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