Canadian GDP rose 0.5 percent on the quarter in the second quarter for an annualized rate of 2.1 percent. The latter came in the on the high end of Econoday's consensus range to lift the country's Relative Performance Index to a strong 32, a level that will not increase pressure on the Bank of Canada to further cut rates.

Looking at quarter-over-quarter rates, goods-producing industries rose 0.4 percent with service-producing industries up 0.6 percent. Overall, 15 of 20 sectors posted second-quarter gains.

The public sector, boosted by educational services as well as health care and social assistance, rose 1.0 percent on the quarter and was the largest contributor for a second straight quarter.

Mining, quarrying, and oil and gas extraction rose 2.5 percent for its best showing since the second quarter of 2022. Oil and gas led the growth.

Other sectors of note include finance and insurance, up 0.8 percent for its best showing since third quarter 2021 and reflecting what Statistics Canada says was anticipation of Bank of Canada rate cuts. On the downside, construction fell 0.4 percent with residential construction down 1.9 percent. Manufacturing fell 0.2 percent for its fourth straight decline.

A 1.7 percent annualized growth rate is the consensus for Canadian second-quarter GDP, same as the 1.7 percent growth rate in the first quarter.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There is no quarterly flash estimate and the first report is typically not issued until around the end of the second month after the reference period. This has the advantage of limiting the size of any future revision and also accommodates the inclusion of the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. Unlike the U.S., Canada produces only one estimate per quarter once full data are available for all components. Most production reports that lead to Canadian GDP are released before the official GDP number. Therefore, actual GDP figures usually confirm expectations. However, an unexpected release can move markets due to the significance of the figure.

GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.

Robust GDP growth signals a heightened level of economic activity and often a higher demand for the domestic currency. At the same time, economic expansion raises concerns about inflationary pressures which may prompt monetary authorities to increase interest rates. Thus positive GDP readings are generally bullish for the Canadian dollar, while negative readings are generally bearish.