TORONTO — Canada's main stock index was up more than 100 points Tuesday, buoyed by strength in base metals and utilities, while U.S. markets were also up.
The S&P/TSX composite index was up 114.40 points at 19,660.31.
In New York, the Dow Jones industrial average was up 333.83 points at 33,160.83. The S&P 500 index was up 21.31 points at 3,828.11, while the Nasdaq composite was up 51.68 points at 10,616.20.
The optimism of Friday’s rally continued through Tuesday, said Philip Petursson, chief investment strategist at IG Wealth Management.
“I would say the story of the day is speculation of a continued weakness in the U.S. dollar and that’s why we’re seeing gold move,” he said. “Gold is driving the TSX.”
This is an indication that the U.S. dollar might finally be reversing, said Petersson, as the dollar and gold are inversely related.
The December gold contract was up US$35.50 at US$1,716.00 an ounce and the December copper contract was up eight cents at US$3.68 a pound.
The Canadian dollar traded for 74.40 cents US compared with 74.11 cents US on Monday.
As signs of inflation abating start to show, everything that’s inversely correlated to the U.S. dollar will likely do well, said Petursson, such as commodities.
The Nasdaq is bearing the brunt of continued lower valuations in tech, said Petursson. The big names have been disappointing investors, he said, who are instead flocking back to tried-and-true investments. A similar trend is happening in Canada, he added.
“You're seeing investors flock to the cheap area of the market. And interestingly, for Canada, that continues to be the commodity space.”
U.S. markets rose ahead of the midterm elections. Regardless of the outcome, usually the end of the U.S. midterm elections is followed by a sigh of relief that the uncertainty is over from markets and a rally through the end of the year, said Petursson.
“I think we're going to see a nice positive finish from here to the end of the year, a continuation of this rally.”
Meanwhile, U.S. inflation data is releasing this week while Canadian data comes next week. Petursson said it's looking increasingly likely that inflation will continue to cool, albeit slowly, heading into 2023.
"I think what we're going to see is gradual improvement ... over the course of the next 18 months," he said.
The December crude oil contract was down US$2.88 at US$88.91 per barrel and the December natural gas contract was down 81 cents at US$6.14 per mmBTU.
This report by The Canadian Press was first published Nov. 8, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press
