Bank stocks need to recover before the TSX can go higher this year: Technical strategist

The Toronto Stock Exchange does not have a chance at ending this year higher unless Canadian bank stocks improve, a technical strategist says.

“The second half of the year for the TSX starts with the banks,” said Sohn. “If Canadian banks can stabilize, any sort of improvement would be helpful to the TSX; we’ll take anything at this point given how choppy they’ve been.”

The S&P/TSX Composite Index Banks has underperformed its broader index since March, back when Silicon Valley Bank collapsed and sent shockwaves through global financial markets.

Higher interest rates could also be to blame for the lack of recovery in bank stocks, said Sohn, “perhaps interest rates are the key driver here, perhaps we need to see rates cool off so the banks can gain their footing and start to turn higher.”