The Canadian stock market opened strong and never looked back as the bulls remained firmly in control and the main index rose sharply for a 2nd day on hopes the global economic recovery is taking hold. The S&P/TSX Composite Index ended Monday up 104.58 points to 11,512.26 or 0.91%. Manufacturing sales rose 1.4% in September to $41.7 billion, largely reflecting increases in the motor vehicle industry, according to figures released this morning by Statistics Canada. Manufacturing sales have increased in 3 of the past 4 months, after dropping to a recent low of $38.5 billion in May. Despite the recent gains, sales remained 18.6% below September 2008 levels.
The key sectors leading gains included energy, gold and materials.
In the United States stocks rose broadly. Federal Reserve Chairman Ben Bernanke reinforced expectations that interest rates would stay low to spur growth in the economy while unemployment remains at a historic high in the United States. Bernanke repeated that the Fed was likely to keep interest rates exceptionally low for “an extended period,” a pledge that weighed on the U.S. dollar and drove investors to snap up shares of natural resource companies as prices of global commodities went down. The overriding message from Bernanke is that interest rates will stay low and remain low for the near to medium term.
The Dow Jones industrial average gained 1.33%; the Standard & Poor’s 500 Index added 1.45%, to 1,109.30 — its close above the psychologically important 1,100 level for the 1st time since October 2008. The Nasdaq Composite Index gained 1.38%. Economic data showed October retail sales rose a brisk 1.4% last month but were much less impressive with auto sales stripped out.
U.S. retail sales grew more than expected last month as vehicle purchases bounced back, but non-auto sales rose modestly, suggesting consumers remained too cautious to drive a robust economic recovery. Other data showed New York state manufacturing activity slowed in November for the 1st time in 4 months, further highlighting the uneven nature of economic recovery after the worst recession since the 1930s. Consumer spending normally accounts for about 70% of U.S. economic activity. Bernanke said he believed the recent pickup in economic activity was a reflection of “more than purely temporary factors and continued growth next year is likely.” The New York Federal Reserve Bank’s gauge of New York State manufacturing activity slowed to 23.51 in November from 34.57 in October. Analysts still reckon high unemployment, coupled with low income growth and tight credit, will hamper growth.
Things will likely be a little soft this morning considering the strong gains from yesterday.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
