TSX recap: Index climbs 0.40% on banking, batteries
Canada's main stock index posted a small gain Wednesday, led higher by financials and battery metals, while U.S. markets were mixed.
The S&P/TSX Composite Index closed up 79.43 points, or 0.40 per cent, at 20,116.20.
In New York, the Dow Jones Industrial Average was up 13.44 points at 35,430.42. The S&P 500 Index was down 4.31 points at 4,550.58, while the Nasdaq Composite was down 23.27 points at 14,258.49.
U.S. markets started off in the green thanks to an easing in bond yields, said Greg Taylor, chief investment officer at Purpose Investments, though the modest gains faded somewhat into the afternoon.
Yields have been coming off as more comments come from U.S. Federal Reserve officials that indicate the central bank is on pause, Taylor said.
“It seems like the expectation for central banks now has moved from when the next hike is to when the next cut is,” he said.
It’s been a big month for the markets, so some profit-taking is to be expected, said Taylor, as November draws to a much more positive close than October.
“It’s going to take a lot of good news to get it to go much higher than this,” said Taylor. “We’re kind of waiting for a catalyst and probably need some more time more than anything else.”
The U.S. economy grew at an annual pace of 5.2 per cent from July through September, the government said Wednesday, up from a previous estimate of 4.9 per cent. Consumer spending also rose 3.6 per cent during that period.
Good news economically is still bad news in the U.S. because of the lingering fear that the central bank could raise interest rates again, said Taylor. That’s not the case in Canada, where GDP for the third quarter — slated for release Thursday — is expected to be negative for the second quarter in a row.
“There’s definitely been a separation between Canada and the U.S.,” said Taylor. “It feels like Canada’s on the verge of recession and the U.S. seems to be more leaning towards a soft landing, or kicking the can down the road further.”
That’s largely because the Canadian consumer is much more sensitive to rate hikes due to the differences in the mortgage and housing market, Taylor said.
While investors still seem to expect central banks on both sides of the border to start cutting rates in the second quarter of next year, Taylor thinks those expectations will eventually diverge.
“If the data in the U.S. stays stronger, then I think that will start to split.”
Oil moved higher for the second day in a row, ahead of the OPEC meeting Thursday that was delayed from last week, noted Taylor.
Amid a period of ongoing volatility for oil, “I think that's going to be the next big headline, to see what they do, if they extend some of these production cuts,” he said.
The Canadian dollar traded for 73.58 cents U.S. compared with 73.63 cents U.S. on Tuesday.
The January crude contract was up US$1.45 at US$77.86 per barrel and the January natural gas contract was down three cents at US$2.80 per mm/BTU.
The February gold contract was up US$6.90 at US$2,067.10 an ounce and the March copper contract was down a penny at US$3.83 a pound.