Canadian stock markets posted a very strong advance yesterday and hit a high for the year while the Canadian dollar pushed higher. Stocks and the Canadian dollar received a boost from record gold prices and stronger oil prices as investors renewed their appetite for risk taking after worries over Dubai’s debt waned. Worries about Dubai’s debt subsided after state conglomerate Dubai World, the center of the debt storm, said its planned restructuring of some units involved a lower than expected $26 billion in debt.
The Canadian dollar moved above $0.96 the highest since October 21st extending gains made on Monday after data showed Canada officially “exited” the current recession. Although the currency is on another run higher, Ottawa is unlikely to have to take special measures to curb the rise, such as those taken on the yen by Japan, Finance Minister Jim Flaherty said on Tuesday. The Bank of Japan announced more measures to ease monetary policy to help the ailing economy following an emergency meeting, while holding interest rates at 0.1%.
The S&P/TSX Composite Index was up 260 points or 2.27% and gains were led by gold & materials shares.
In the United States the Dow Jones industrial average climbed to its highest close in 14 months as a weak U.S. dollar boosted natural resource shares and economic data reinforced hopes for a sustainable but slow & fragile economic recovery. Stocks also got a sentiment lift as concerns receded about the impact of Dubai’s debt trouble. Data showed pending sales of previously owned U.S. homes rose more than expected to their highest level in 3 ½ years in October. Other data showed construction spending was flat in October, above the expectation for it to slide in the month. In addition, the Institute for Supply Management said that the manufacturing sector expanded in November, though the expansion was less than expected.
Investors are starting to realize that things are coming back. There are some pockets of weakness & risks, but overall things are getting a little better day by day.
The Dow Jones industrial average jumped by 1.23%, the Standard & Poor’s 500 Index rose 1.21% and the Nasdaq Composite Index rose 1.46%.
European markets are down a little this morning and so are U.S. stock index futures after an industry report showed private employers cut more jobs than economists estimated in November. ADP Employer Services said employers cut 169,000 jobs last month, topping the 150,000 median estimate in a Bloomberg survey of economists. Stocks are looking down about 0.10% this morning and commodity prices are giving up some of the recent gains but gold continues to advance.
In short, expect things to remain relatively bullish up to Christmas but Friday’s U.S. jobs report will be a key economic driver.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
