Index Daily Change Weekly Change
S&P/TSX composite index 0.52% Gain 0.20% Gain
Dow Jones industrial average 0.64% Gain 0.60% Gain
Standard & Poor’s 500 Index 0.67% Gain 1.40% Gain
Nasdaq Composite Index 0.71% Gain 2.10% Gain
The Canadian stock market finished a volatile week higher on Friday with broad gains backed by a rise in the price of key metals and optimism that Canada’s economic recovery is on track. The materials sector led and rose 1.13% as gold hit its highest level this year. The index was up for its 4th straight weekly gain, after hitting an 18-month high on Monday.
Data showed fewer Canadians returned to work in March than expected but the 3-month hiring trend was the strongest since the financial crisis intensified in the fall of 2008, suggesting economic recovery is entrenched. The improving economy theme was also noted in the United States, with the Dow surpassing 11,000 for the 1st time since September 2008, as Chevron gave an upbeat outlook and data showed wholesale inventories rose more than expected in February, brightening future prospects for the economy and corporate profits.
The Canadian stock market could gather some momentum this week as U.S. 1st quarter earnings season starts. Canada’s corporate reporting season isn’t in full swing for a few weeks, though a few tech and media companies have released earnings. It looks like the companies in general are going to beat expectations.
Aluminum giant Alcoa kicks off earnings today after the market close. Later in the week, American bellwether companies including railway CSX Corp., chipmakers Intel and Advanced Micro Devices (AMD), JPMorgan Chase & Co. and Bank of America (BofA), Yum Brands Inc. and Internet giant Google also release their financial results.
Analysts expect Alcoa, which traditionally kicks off the quarterly earnings season, to post a first-quarter profit of 10 cents per share, which would be a big improvement from a loss of 59 cents per share a year ago.
In the United States stocks rose on Friday with the Dow surpassing the 11,000 mark but gave up that milestone by the end of the day!
Most investors acknowledge that the recession has ended, and the question facing the market now is, “are we moving from a recovery to sustainable growth?” Though some momentum indicators suggest the rally could start to run out of steam, the market has continued to grind higher and add another leg to the run-up started last March.
Worries about Greece’s debt problems, which have weighed on stocks for weeks, eased after a European Union source said policy-makers had reached an agreement on terms of possible emergency loans for Athens. Desperate to halt the Greek debt crisis that has hammered the Euro, fellow Euro zone governments tossed it a financial lifeline Sunday, saying they would make C30 billion ($40 billion) in loans available this year alone if Athens asks for the money. The International Monetary Fund (IMF) stands ready to chip in another $10 billion.
The promise was another attempt to calm markets that have been selling off Greek bonds in recent days. Markets viewed the initial pledge made in March as too vague and carrying such tough restrictions that made it difficult for Greece to access any money. As a result, investors demanded high rates to loan to the government as it struggles to avoid default and pay some 54 billion in debt coming due this year rates the government says it can’t go on paying. Greece has been spending beyond its means for years, leaving it with a 2009 budget deficit of 12.9% of economic output. The revelation of its statistics fudging has hurt the Euro and hurt market confidence, fueling higher borrowing costs which further exacerbates the problem as the government spends more of their budget on interest payments. Athens plans to cut its deficit to 8.7% this year and has launched a 4.8 billion austerity program cutting public sector wages, freezing pensions and hiking taxes.
This morning things are looking to open down by a marginal amount as stock markets await further corporate and sovereign developments
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
