Index Daily Change
S&P/TSX composite index 0.02% Gain
Dow Jones industrial average 0.27% Gain
Standard & Poor’s 500 Index 0.34% Gain
Nasdaq Composite Index 0.23% Gain
The Canadian stock market ended slightly higher yesterday, rebounding from steep losses early in the day as oil prices climbed back from lows and optimism grew about the global recovery. The leader in the bounce was the heavily weighted energy sector, which ended up 0.6%. Oil prices ended down $0.49 at $85.39, but that was more than $1 off the day’s low.
Early in the day, the index was down more than 1% as sovereign debt fears re-emerged regarding whether Greece, Italy, Portugal, Ireland, Spain, or even the UK, which will continue to overhang the stock market. In the United States, unexpectedly robust March retail sales numbers helped investors return to a buying mood, possibly pointing to strong U.S. corporate earnings.
On the downside, shares of Shoppers Drug Mart, Canada’s biggest drugstore chain, plunged as investors assessed the fallout from Ontario’s plan to reduce generic drug prices. Its shares ended down 9.8%.
The next big Canadian economic release is jobs data for March this morning. Market participants are expecting a net gain of 25,000 jobs, up from the 20,900 jobs added in February.
In the United States stocks gained after surprisingly strong March retail sales increased optimism that the economic recovery is on track. The sales reflected a boost in consumer demand that some investors had doubted would materialize as job growth is still low. The whole premise being, if consumer spending and retail sales maintain anywhere close to where they were a couple years ago, then that will be a true recovery.
The indexes’ moderate gains were characteristic of the rally’s most recent leg. The S&P 500 has ground slowly higher since the beginning of March, rising 7.4%, even as momentum indicators suggest the rally could stall in coming weeks. The biggest thing in the market at the moment is, the path of least resistance or momentum is higher – there are investors jumping on that bandwagon.
This morning stocks rallied worldwide and Greek bonds rose for the 1st time in 2 weeks on speculation Europe’s most indebted nation will get an international bailout to avert a default. The Euro strengthened.
The MSCI World Index of 23 developed nations’ stocks rose 0.5%. The MSCI Emerging Markets Index increased 0.7% to a 20-month high. Futures on the Standard & Poor’s 500 Index gained 0.3% and the price of oil advanced by 0.80%.
The recent market action means that an external intervention may be unavoidable as Greek bonds continue to drop in value making a secondary issue of bonds almost impossible to complete without help. An intervention over the weekend is a distinct possibility. Yields on Greek 2-year notes have risen more then 2.00% in the past 3 weeks. Greece plans to announce today how much it will sell at an April 13th auction of Treasury bills.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
