TORONTO – Canada’s main stock index made a turnaround from early losses to end up Thursday along with U.S. markets as data showed continued resilience in the U.S. economy.
Stocks markets had started down or tepidly up after mixed results a day before, as investors try to gauge from U.S. earnings how the balance between growth and inflation is playing out.
Markets got a little more insight Thursday as the U.S. Commerce Dept. reported that the economy grew at a 2.9 per cent annual pace from October through December, slower than the 3.2 per cent for the three months before but still showing strength despite the pressure of high interest rates.
“That resilience is still showing growth in the U.S. and that’s what we want to see,“ said Allan Small, senior investment adviser at IA Private Wealth.
“Once upon a time good economic data was bad news because that meant the Fed would raise more, the Bank of Canada would raise more, and now I think we’re coming to the end, or agreeing that the end is near, for rate increases.”
That was reinforced Wednesday after the Bank of Canada said that it expects to hold its key interest rate steady now after a quarter percentage point raise, as long as economic conditions fall within its expectations.
With the rate hike cycle at or near the end and the U.S. Federal Reserve to announce its next rate decision Feb. 1, investors are looking for signs that the economy is still holding up, said Small.
“We now want to see a resilient economy.”
The positive sentiment helped push the S&P/TSX composite index to end up 100.90 points at 20,700.50.
In New York, the Dow Jones industrial average was up 205.57 points at 33,949.41. The S&P 500 index was up 44.21 points at 4,060.43, while the Nasdaq composite was up 199.06 points at 11,512.41.
Positive earnings, including results from Tesla Inc. that beat expectations, also helped boost markets after investor concerns about Microsoft guidance a day earlier led to a pullback.
In Canada, forestry stocks got a boost as companies announced restructurings and mill closures. Canfor Corp. was up nine per cent, Interfor Corp. up 10 per cent, and West Fraser Timber Co. Ltd. was up eight per cent.
The S&P/TSX energy index was up 2.5 per cent, including gains of four per cent from Suncor Energy Inc. and almost five per cent from Cenovus Energy Inc., as oil prices rose.
The March crude contract was up 86 cents at US$81.01 per barrel and the March natural gas contract was down seven cents at US$2.85 per mmBTU.
Utilities and telecoms indexes were down on the TSX, while financials and information technology rose.
The Canadian dollar traded for 74.91 cents US compared with 74.67 cents US on Wednesday, getting a lift from Wednesday’s rate hike to 4.5 per cent.
The February gold contract was down US$12.60 at US$1,930 an ounce and the March copper contract was up two cents at US$4.27 a pound.
This report by The Canadian Press was first published Jan. 26, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
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