TORONTO — Strength in financial, utilities and technology stocks helped the TSX gain almost 150 points Friday, while U.S. markets broadly rose on the back of technology, with the S&P 500 rallying 1.2 per cent to hit a new all-time record high.
“It’s been a really constructive day for equities, certainly in North America,” said Kathrin Forrest, equity investment specialist at Capital Group.
The S&P/TSX composite index closed up 149.79 points at 20,906.52.
In New York, the Dow Jones industrial average was up 395.19 points, or 1.1 per cent, at 37,863.80.The S&P 500 index was up 58.87 points at 4,839.81, while the Nasdaq composite was up 255.32 points, or 1.7 per cent, at 15,310.97.
The technology sector in particular ended the week with a strong two-day rally, led by semiconductor companies, said Forrest.
That was partially triggered by Thursday’s earnings report from Taiwan Semiconductor Manufacturing Co., she noted, which reported favourable results and strong revenue growth expectations for the year.
“That has lifted up the broader group as well,” she said.
In Canada, where markets saw milder gains on the back of broad U.S. strength, the latest retail sales data for November came in weaker than expected, said Forrest.
Retail sales declined by 0.2 per cent in November, led by weakened spending at food and beverage retailers and coming in below many economists’ expectations.
“That’s not a great backdrop for Canada,” said Forrest, though she noted the early estimates for December look a little better.
The softer retail sales are contrasted with this week’s inflation print, which saw prices in December rise 3.4 per cent, a faster pace than November’s 3.1 per cent.
“Inflation, especially core inflation, continues to be sticky,” said Forrest.
Canada’s economy has weakened under the weight of interest rate hikes much more than in the U.S., despite that sticky inflation.
“It’s a little bit of a different picture there, where you continue to see broad-based strength in the economy,” said Forrest.
Central banks on both sides of the border are expected to start cutting their key rates this year, but the lingering question is when and by how much.
Traders’ bets on the number of cuts the U.S. Federal Reserve will take in 2024, and when they will start, have been pared back considerably since the end of 2023, said Forrest, with a March cut looking less and less likely as the weeks have passed.
Expectations for the Bank of Canada's cuts are even softer, she said. The slower trajectory partially reflects a lower starting point, added Forrest, but also the continued stickiness of inflation.
Both central banks have emphasized the need to continue being data dependent, she said.
The Canadian dollar traded for 74.28 cents UScompared with 74.05 cents US on Thursday.
The March crude oil contract was down 70 cents at US$73.25 per barreland the March natural gas contract was down 16 cents at US$2.25 per mmBTU.
The February gold contract was up US$7.70 at US$2,029.30 an ounceand the March copper contract was up four cents at US$3.79 a pound.
This report by The Canadian Press was first published Jan. 19, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
