The facade of the original Toronto Stock Exchange building is seen in Toronto
The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. Reuters

Canada's main stock index will add to its rally this year and hit a record high in 2024 as the Bank of Canada turns less hawkish and China's reopening boosts demand for commodities, a Reuters poll found, but the upswing will be less than previously thought.

The median prediction of 21 portfolio managers and strategists in the Feb. 10-21 Reuters poll was for the S&P/TSX Composite Index to advance 6.2% to 21,500 by end-2023, compared with 22,000 expected in the previous poll in November.

It was then expected to climb to 22,500 by mid-2024, moving past the record closing high it set last March of 22,087.22, but less than November's forecast of 23,000.

The TSX index has given up some of its gains in recent days but is still up 4.5% since the start of 2023.

"Equity markets have exhibited remarkable resilience, climbing a wall of worry toward higher common stock prices," said Brandon Michael, senior investment analyst at ABC Funds.

"The main drivers toward higher stock prices include decelerating inflation, central banks easing up on their monetary policy tightening efforts, and improving investor risk appetite."

The Bank of Canada last month became one of the first major central banks to signal a pause in its tightening campaign, saying it will take time to assess how well interest rate increases are working to lower inflation.

Canada's annual rate of inflation cooled to 5.9% in January after peaking at 8.1% in June, data on Tuesday showed.

"My expectations for this year are founded on an expectation that a reopening in China should see its demand for materials rebound, boosting commodity prices and resource stocks," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The energy and materials sectors combined account for about 30% of the Toronto market's weighting. Oil has climbed 9% since December when China abandoned its zero-COVID policy and reopened its economy.

Still, eight of 12 analysts who answered an additional question said the chances of a correction over the coming three months was high or very high.

"We expect a correction in the near term as the year-to-date rally in global equities has been disconnected from a realization, better reflected in fixed income markets, that (interest) rates will need to stay higher for longer," said Chhad Aul, chief investment officer and head of multi-asset solutions at SLGI Asset Management Inc.

Canada's 5-year yield has surged about 80 basis points since mid-January to 3.59%, tracking the upswing in U.S. Treasury yields.

(Other stories from the Reuters Q1 global stock markets poll package:)