Canada’s stock market closed lower Monday as financial stocks turned negative a day before the big Canadian banks start reporting quarterly earnings (BMO is due to report this morning and they are starting things off with a positive surprise) while energy stocks were flat even as oil prices continued to climb upward (flat this morning). The S&P/TSX composite index closed down 0.38%. The financial sector ended the day down 0.7% while the energy sector rose 0.41% as oil prices continued to rise amid spreading optimism about a global economic recovery.
The TSX had started the day higher as positive momentum carried on from Friday, when Federal Reserve chairman Ben Bernanke declared that the economy is on the verge of recovery and U.S. home re-sales posted the largest monthly increase in at least 10 years. In the short-term investors will remain cautious as the overall economy has to validate the assumptions built into current stock prices in order to justify the recent and significant stock market rally. Statistics Canada says sales rose a much better than expected 1%, a big improvement from the 0.1% drop that economists were expecting.
Analysts have been warning that the stock market’s upbeat mood could be put to the test with reports this week on consumer confidence and housing. Consumers are still struggling and improved consumer confidence and spending is widely seen as one of the keys that could help end the recession.
In the United States stocks ended the day barely changed as investors took a break from a 4 day rally that lifted major indexes to 10 month highs. The Dow Jones industrial average added 0.03% but the Standard & Poor’s 500 Index declined 0.05% and the Nasdaq Composite Index declined by 0.14%. Financial stocks, which were among last week’s biggest advancers in the U.S. lost their momentum partially after veteran bank analyst Richard Bove said 150 to 200 more U.S. banks could fail during the banking crisis but another systematic shock to the system is not expected - the S&P financial index fell 0.9%.
Stock markets are looking slightly higher this morning
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
