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3 Things to Watch on the TSX on Monday

The Canadian stock market is set to enter the final trading week of the summer. There has been volatility in some key sectors, namely cannabis, but overall, investors should be pleased with how the markets have shaken out this season. Below are three things to watch for on the TSX on Monday.

TSX rolling after hitting a record high

The S&P/TSX Composite Index hit another record high on Friday at the time of this writing. Investor sentiment has been boosted from news that the United States and China may be near a breakthrough in their damaging trade spat.

Both have offered concessions that could roll back tariffs, at least in the near term. National security issues, which have been a roadblock to a long-term agreement, may be shelved for later talks.

There was broad-based support across major sectors. Big bank stocks have also joined in on the action. Royal Bank (TSX:RY)(NYSE:RY) stock had climbed above the $105 mark at the time of this writing, seemingly poised to challenge its 52-week highs after a positive third-quarter report saw its profit rise 5% year over year.

Unfortunately, the TSX has still greatly underperformed the S&P 500 over a five-year stretch. Rumblings south of the border may also have an impact as we start the week.

Markets brace for U.S. Fed meetings

The United States Federal Reserve is set to begin its two-day meeting on September 17. North American and global markets will eagerly await to see how the Fed proceeds. Many are still forecasting another rate cut, which would have an impact on the Canadian dollar.

The Canadian dollar hit a one-week low relative to the U.S. dollar on Friday after a Statistics Canada report revealed household debt-to-income widened to a record 174.1%.

A move downward by the U.S. Fed will put more pressure on the Bank of Canada (BoC) in late 2019. Top analysts have projected that the BoC will not trigger a downward move in the benchmark rate until 2020, at the earliest. Investors should brace for a U.S. Fed move this week.

One stock to watch as the Canadian election gets underway

The Canadian federal election officially began on September 11. In 2015, the Liberal victory had a significant impact on markets. The cannabis sector erupted in anticipation of recreational legalization. Investors will not be able to look forward to the rise of a new sector this time around, but there are still stocks to keep an eye on.

SNC-Lavalin (TSX:SNC) is set to become the proverbial punching bag over the course of the (mercifully) short election campaign run. Shares of SNC-Lavalin shot up 9% on September 13 after the Globe and Mail reported that witnesses involved in the case will be unable to speak to the RCMP due to cabinet confidentiality.

SNC also received a boost this past week after Jarislowsky Fraser, a top investment management firm, bumped its stake up to 11%. This is a big vote of confidence for the Quebec-based giant.

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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

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