TSX gets small lift as investors move from defensive sectors that led in 2019

TSX gets small lift as investors move from defensive sectors that led in 2019
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TORONTO — Canada’s main stock index got a small lift Thursday as investors largely moved away from defensive sectors that have done well in 2019.

“It’s another one of these days where there’s a bit of churn going on beneath the surface,” said Mike Archibald, associate portfolio manager with AGF Investments Inc.

Investors moved from utilities and real estate to more cyclical sectors of the market like technologies, consumer discretionary and industrials as part of a realignment.

“The market is starting to position itself on the expectation that 2020 growth numbers are going to look a little bit better than the 2019 growth numbers did,” he said.

The S&P/TSX composite index closed up 33.39 points at 16,369.32 on the day. It has gained 14.2 per cent so far this year with strong gains from utilities and real estate. Technologies has also surged with a rise in the value of Shopify shares, which increased by 8.8 per cent Thursday.

The Canadian market has appreciated on an expansion in multiples even as earnings growth has been negligible. Archibald sees that reversing next year while the bull markets continues and the market approaches new record highs.

“People are obviously trying to position themselves for what they expect is coming next and our view is that that’s going to be better numbers in the fourth quarter and into 2020.”

Technology led the TSX on Thursday, gaining 2.4 per cent. Materials was the second best performing sector, rising 1.8 per cent on the back of higher gold prices as Agnico Eagle Mines Ltd. was up 6.6 per cent. Meanwhile, Teck Resources Ltd. fell nearly five per cent after the Vancouver-based miner said it will cut 500 full-time equivalent jobs as it focuses on trimming $500 million from planned spending through to the end of 2020.

The December gold contract rose US$9.00 to US$1,504.70 an ounce and the December copper contract shed 0.35 of a cent to US$2.67 a pound.

Gold prices rose as investors looked for some protection after outgoing European Central Bank president Mario Draghi said he still sees a weak outlook in most of continental Europe.

Industrials was pushed higher by Canadian Pacific Railway Ltd., which reported results after markets closed on Wednesday that Archibald said were “better than feared” as a slowdown in rail traffic was slightly better than expected.

The energy sector lost 0.9 per cent as Husky Energy Inc. dropped 6.6 per cent after the company slashed its budget with quarterly net earnings being cut in half.

The December crude contract gained 26 cents to US$56.23 per barrel and the December natural gas contract advanced 3.8 cents to US$2.46 per mmBTU.

The Canadian dollar traded for an average of 76.48 cents US, compared with an average of 76.42 cents US on Wednesday.

In New York, the Dow Jones industrial average was down 28.42 points at 26,805.53. The S&P 500 index was up 5.77 points at 3,010.29, while the Nasdaq composite was up 66.00 points at 8,185.80.

This report by The Canadian Press was first published Oct. 24, 2019.


Ross Marowits, The Canadian Press

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