Index Daily Change
S&P/TSX composite index 0.54% Gain
Dow Jones industrial average 0.42% Gain
Standard & Poor’s 500 Index 0.57% Gain
Nasdaq Composite Index 0.39% Gain
Canada’s main stock market index edged higher yesterday as rallying oil, gold and base-metal prices led the resource-heavy index up. U.S. crude prices advanced about $2 as a weaker U.S. greenback and stronger equities markets helped lift prices, sending the index’s powerhouse energy sector up more than 1%.
Global stocks gained as Greece launched a sovereign bond issue, easing concerns about the country’s debt problems, while investors were optimistic about key U.S. jobs data later this week. This Wednesday is also the end of the 1st quarter for 2010 and there is likely some equity buying as institutional investors ‘window dress’ their portfolios.
In the United States stocks rose with major manufacturers and industrials, the quarter’s top-performing sector leading the way. This is a holiday-shortened week that will cap the S&P 500’s 4th straight positive quarter. Although the underlying tone of the stock market was positive, there was a drop in financial sector.
Also boosting investor risk appetite was data showing that U.S. consumer spending rose as expected in February for a 5th straight month. As we come out of the recession it is a definitive positive to see an improvement in consumer spending.
As mentioned U.S. consumers tapped their savings in February to keep spending on an upward path for a 5th straight month, implying that consumption may be strong enough in coming months to keep a recovery going. The rise in spending despite flat incomes in February suggests households were becoming positioned to pick up the spending from the government. Inventory-rebuilding by business as helped fuel growth.
The Federal Reserve should be pleased to see steady spending growth, but will not raise rates until the job picture improves. Spending normally accounts for about 70% of U.S. economic activity. Lackluster spending has raised worries the economic recovery from the worst downturn since the 1930s that started in the 2nd half of 2009 could loose steam when government stimulus and the lift from inventories wanes. Consumers, many of whom have lost a lot of equity in the value of their stock portfolio and/or their home have been reluctant to spend and have conversely attempted to save more during the recession i.e. pay-off debt.
A Reuters’ survey forecast the closely watched employment report due on Friday to show employers added 190,000 jobs after cutting 36,000 positions in February, largely driven by hiring for the 2010 census. This would mark only the 2nd time payrolls have increased since the recession started in December 2007.
This morning Europe is pretty flat, oil is up, gold is down and North American equity futures are up about 0.20% and are looking to hold their gains from yesterday.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
