North American stock markets start week up with broad-based rally

North American stock markets start week up with broad-based rally
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TORONTO — U.S. stock markets set new record highs while the TSX also made gains to start the week on a broad-based rally induced by optimism over trade deal between the U.S. and China.

As the year winds down, the tone is markedly different from a year ago when markets collapsed, stoking fears of an eventual recession.

“Now it’s starting to flip back the other way that things are doing OK out there and have the potential to improve if some of the headwinds go away,” says Colin Cieszynski, chief market strategist at SIA Wealth Management.

Since losing 5.7 per cent of its value last December, the S&P/TSX composite index has surged 19 per cent as of Monday, to within 50 points of its record high.

The S&P/TSX composite index closed up 53.23 points at 17,056.36, after reaching an intraday high of 17,095.46.

In New York, the Dow Jones industrial average was up 100.51 points at 28,235.89. The S&P 500 index was up 22.65 points at 3,191.45, while the Nasdaq composite was up 79.35 points at 8,814.23. All three markets closed at record highs after posting new intraday records.

In addition to trade, markets were supported by a U.S. budget settlement that ensures there will be no government shutdown and strong Chinese economic numbers, said Cieszynski.

Chinese industrial production rose 6.2 per cent in November from a year earlier and retail sales in China also jumped eight per cent.

“It’s a little different situation than where we were a year ago where almost everybody was rushing to sell to get everything off their books and now instead of the fear of markets going down it’s the fear of missing out and people jumping on board to get into the market before the end of the year,” he said in an interview.

The Canadian dollar traded for 76.09 cents US, the highest level in seven weeks, up from an average of 75.86 cents US on Friday.

Eight of the 11 major sectors of the TSX were stronger, led by telecommunications, utilities and industrials. Telecommunications rose one per cent as shares of Cineplex gained 41 per cent after Canada’s largest movie chain agreed to a $2.8-billion friendly takeover deal from U.K.-based Cineworld Group PLC.

Energy was up 0.63 per cent with Encana Corp. gaining almost four per cent as crude oil and natural gas prices rose on the positive sentiment.

The January crude contract was up 14 cents at US$60.21 per barrel and the January natural gas contract was up 4.5 cents at US$2.34 per mmBTU.

Health care lost 2.4 per cent as Bausch Health Companies Inc. fell after it agreed to pay US$1.21 billion to settle a lawsuit over a stock plunge that hit investors about four years ago. Hexo Corp. dropped 3.4 per cent after the cannabis producer said it lost $62.4 million in its latest quarter compared with a loss of $12.8 million in the same quarter last year even though revenues more than doubled to $14.5 million.

Materials was lower with Endeavour Mining Corp. down 4.7 per cent as metal prices were mixed. The February gold contract was down 70 cents US at US$1,480.50 an ounce and the March copper contract was up 3.05 cents at US$2.81 a pound.

Cieszynski said investors are anticipating an improved global economy in the next year.

“I think it would take something pretty significant and a pretty big negative surprise to throw things off the rails at this point and I think people are looking beyond the local mores to the global situation.”

This report by The Canadian Press was first published Dec. 16, 2019.

Companies in this story: (TSX:CGX, TSX:BHC, TSX:HEXO, TSX:EDV, TSX:ECA, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press


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