Canada is an energy exporter and is largely independent in the production of refined products. Australia is a net energy exporter but imports over 80% of its refined products. If those are the challenges, let’s consider the positive attributes, advises Eoin Treacy, editor of Fuller Treacy Money.
The S&P/TSX Index in Canada has trended higher in an impressively consistent manner for two years. It has benefitted from the gold and copper boom, the demand for energy, the AI construction boom, and the strong performance of the banking sector.
S&P/TSX
Even so, it is trading at a significant discount to the US. If you believe that the AI and broader electrification trends will persist and that inflationary pressures will ultimately subside, then Canada is not a bad place to be.
Meanwhile, Australia’s S&P/ASX200 has been ranging for more than a year. The banking sector is underperforming, which is a warning sign for the economy. But the S&P/ASX 300 Resources Index is currently steadying from the region of the 200-day moving average.
S&P/ASX200
Since Australia is so heavily dependent on imports of fuel, it is much more susceptible to negative economic consequences of the conflict in the Persian Gulf persisting. When peace breaks out, it will be rally sharply.