Toronto market recovers from December sell off as TSX up on crude price gain | The Telegram
TORONTO — Canada’s main stock index has fully recovered from December’s deep sell off by rising Thursday on the back of further gains in oil prices.
However, the nearly 10 per cent rally so far in 2019 signals that investors haven’t learned from the past over-exuberance, says Kash Pashootan, CEO and chief investment officer at First Avenue Investment Counsel Inc.
He said the resilience of equity markets is overpowering geopolitical and global growth slowdown concerns that were also evident in December.
“So the market has decided to again do a lot of what it has been doing the last few years, which is shrugging off uncertainties and variables that will challenge corporate earnings, global growth and equity returns,” Pashootan said in an interview.
“We feel that the rally that we’ve seen in equity markets is not justified…We did expect to bounce back but we feel that the market has bounced back too much and pricing in too much optimism in the short-term.”
The S&P/TSX composite index closed up 69.25 points to 15,695.98, after hitting an intraday peak of 15,733.13.
Despite the increases, the market is still about five per cent below last year’s high of 16,567.42 set in July.
The TSX rallied as the key energy sector rose 0.7 per cent after crude oil prices hit an eight-day high.
The March crude contract was up 51 cents at US$54.41 per barrel and the March natural gas contract was down 0.2 of a cent at US$2.57 per mmBTU.
Technology led the Toronto market, gaining more than four per cent on stock performances by Tucows Inc. and Shopify Inc.
Industrials rose as Bombardier Inc. shares surged 23 per cent after the plane and train maker said it turned a profit in 2018 for the first time in five years.
The loser on the day was the consumer discretionary sector fell as Canada Goose Holdings Inc. and Canadian Tire Corp. were down.
The Canadian dollar traded at an average of 75.20 cents US compared with an average of 75.53 cents US on Wednesday.
The April gold contract was down US$1.20 at US$1,313.90 an ounce and the March copper contract was up 0.1 of a cent at US$2.77 a pound.
In New York, markets were subdued after U.S. retail sales in December posted the largest drop since September 2009.
The Dow Jones industrial average was down 103.88 points at 25,439.39. The S&P 500 index was down 7.30 points at 2,745.73, while the Nasdaq composite was up 6.58 points at 7,426.95.
The 1.2 per cent decrease in retail sales from November is clear evidence that a global growth slowdown is taking place, said Pashootan.
“It speaks to how consumer spending is anaemic…You don’t need to hire a private investigator to put those pieces together and conclude that the global growth slowdown theme continues to be prevalent.”
Companies in this story: (TSX:BBD.B, TSX:SHOP, TSX:GOOS, TSX:CTC.A, TSX:TC, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press