Canada’s main stock index rose 1% on Monday to finish higher for a 3rd straight session. Financial issues led the way based on optimism that quarterly U.S. bank results this week will show the sector has stabilized after being shaken hard in the global financial crisis. The bank results suggest that credit conditions overall have probably started to improve. The S&P/TSX composite index closed up 1.07% - the index is within reach of its 2009 high.

Canada benefited from the best of both worlds with financials and all the energy/gold sector helping out.

The S&P 500 and Nasdaq rose on Monday as bets that major banks will post reassuring quarterly results fueled another run-up in financials, offsetting uneasiness about the fate of General Motors. After the bell, Goldman Sachs surprised investors by posting stronger than expected quarterly results a day early, and announced a $5 billion public offering of common equity.

It is very clear that the stock market is cheering, not so much that the banks will be fixed but enough that they are not going to die or be nationalized. Some analysts are saying that the crisis phase of this economic downturn is behind us.

The Dow Jones industrial average fell 0.32%, the Standard & Poor’s 500 Index added 0.25% and the Nasdaq Composite Index added 0.05%.

The banking sector’s health has been a major worry after fallout from the financial crisis led the U.S. government to pump billions of dollars into troubled institutions such as Citigroup, which gave Wall Street a surprise last month when it said it was profitable in January and February. That optimism has fueled a month-long recovery of the stock market from 12-year lows in the United States hit in early March. Since setting a bear market closing low on March 9th the S&P 500 has risen 27%.

Regards,

Wilfred