Stock market gains are expected to slow down along with the Canadian corporate earnings, according to a new report from HSBC Investments (Canada) Ltd.

“We continue to see evidence of a maturing economic cycle and, as such, expect earnings in Canada to moderate to the mid single-digit range by the end of the year,” it notes. “Despite our positive long-term view of commodities, we have become increasingly concerned about the maturity of the economic cycle and the speculative nature of certain portions of the commodities markets.”

The firm notes that it’s looking for opportunities to selectively decrease its exposure to the commodity sectors. “With positive earnings growth and only modestly higher interest rates, we continue to expect price appreciation in the equity market at a more modest pace than in the previous two years,” it notes.

The S&P/TSX composite index jumped 5.3% in July as all sectors, except information technology (down marginally), posted positive returns in the month, HSBC reports.

“Leading the market higher were industrials, up 9.1%, energy, up 8.5%, materials, up 5.7%, utilities, up 4.7%, and financials, up 4.5%. The Canadian market is now up almost 14% year-to-date and more than 25% over the past 12 months.”