Canada’s main stock index closed higher for a 6th straight day yesterday with the latest advance led by the energy sector as the price of oil rose. It is the index’s highest closing level in more than a month as improved investor sentiment has helped the stock market rally sharply from the five-year low it hit earlier in the month of March.
Yesterday the energy sector advanced by 4% as the price of oil rose by more than $2 a barrel. The S&P/TSX composite index rose 2.06%. Banks have also seen some nice gains as they continue to benefit from positive comments made by their global counterparts. Stocks have advanced recently on improved investor sentiment versus an improvement in fundamentals.
In the United States, stocks jumped yesterday as an unexpected jump in housing starts pushed Home Depot and other U.S. retailers higher. U.S. housing starts and permits rebounded in February from record lows, rising for the first time in 10 months which gave a glimmer of hope for the recession hit economy.
Analysts said while the data did not mark a change in trend for the depressed housing market, it hinted at some stability that could ease pressure on the economy going forward.
Investors are starting to get a sense that things are actually starting to stabilize – this does not mean the economy won’t retract further it just means that things are not getting worse.
The Dow Jones industrial average rose 2.48%, the Standard & Poor’s 500 Index rose 3.21% and the Nasdaq Composite Index rose 4.14 (reversing the large lost posted on Monday). The blue chip Dow Jones industrial average is now up 4.7% for the month but remains down 15.7% for the year to date.
U.S. stock futures fell this morning indicating the Standard & Poor’s 500 Index may decline from its highest level in almost a month. If stocks can hold onto these levels until month end it will be the 1st time in seven months for stocks to post gains. Investors will await details from the Federal Reserve on new measures to revive the economy and fix the banking system.
There will be a debate on how to intervene. From the Fed, investors may receive some more information. Fed policy makers will likely determine or confirm today that the U.S. recession is still getting worse. The Open Market Committee is scheduled to issue its statement around 2:15 p.m. today in Washington.
As mentioned, stocks advanced yesterday and have currently erased more than half the losses posted since President Barack Obama took office January 20th. The benchmark index for U.S. equities has bounced back 14% from a 12-year low set earlier this month on March 9th. This was helped by speculation that the worst of the financial crisis may be over after Citigroup, Bank of America and JPMorgan Chase said they were profitable in the first 2 months of the year.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
