Strong U.S. economic growth fuelling North American markets
November 28, 2019
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North American stock markets set new record highs yet again on good U.S. data including a positive revision in economic growth in the third quarter.
U.S. GDP came in at a 2.1 per cent annual rate over the summer, up from the Commerce Department’s prior forecast of 1.9 per cent. In addition, durable goods orders rebounded in October from a decrease the month before while initial claims for state unemployment benefits declined.
“At the margin those positive news items could be what’s driving the market higher in general,” Ryan Crowther, portfolio manager at Franklin Bissett Investment Management, told Canadian Press.
The sentiment also caused gold and silver prices to weaken.
On the trade front, U.S. President Donald Trump’s statement that Phase 1 talks are nearly complete and comments from Chinese officials continued to support positive sentiment by investors even as the Dec. 15 deadline approaches for the imposition of US$156 billion in new tariffs on Chinese-made items including consumer goods.
Markets are hoping the tariffs are eliminated or delayed.
“Nothing concrete so there’s nothing to hang your hat on yet as far as results but there seems to be some progress in the right direction being made, at least that’s what seems to be being interpreted by the market,” Crowther said.
The S&P/TSX composite index closed up 64.69 points to a record close of 17,100.57 and an intraday high of 17,104.30.
In New York, the Dow Jones industrial average was up 42.32 points at 28,164.00. The S&P 500 index was up 13.11 points at 3,153.63, while the Nasdaq composite was up 57.25 points at 8,705.18. All three markets rose for a fourth-straight day to set all-time record highs.
The Canadian dollar traded for 75.31 cents US compared with an average of 75.26 cents US on Tuesday.
The TSX enjoyed a broad-based rally with all but one of the 11 major sectors gaining.
Health care led, gaining two per cent as shares of several cannabis producers rose, including Aurora Cannabis Inc. and Hexo Corp., which were up 4.7 and 4.5 per cent respectively. CannTrust Holdings Inc. fell 1.8 per cent, however, after it said the Toronto Stock Exchange is reviewing the company’s eligibility for continued listing on the exchange.
“The sector has been extremely volatile of late as investors digest a multitude of industry challenges but for the day the stocks are higher,” said Crowther.
Consumer discretionary climbed 1.4 per cent as Hudson’s Bay shares surged nearly 11.3 per cent as Catalyst Capital Group made an alternative offer that topped one from a group of investors led by HBC executive chairman Richard Baker.
BRP Inc. shares were up 2.5 per cent after the recreational producers maker said it rode sales of three-wheeled and utility vehicles to record third-quarter revenues, boosting its financial guidance for the third time this year.
Consumer staples were higher as Alimentation Couche-Tard shares were up 2.4 per cent after it announced a $7.7-billion offer for an Australian retailer and posted good fiscal second-quarter results.
The energy sector was up despite lower futures for crude oil and natural gas. It fell on a report saying U.S. crude stockpiles grew by 1.6 million barrels last week and production hit a record high of 12.9 million barrels per day.
The January crude contract was down 30 cents at US$58.11 per barrel and the January natural gas contract was down 3.2 cents at US$2.50 per mmBTU.
Materials was the lone losing sector on the day, falling marginally led by Yamana Gold Inc. down 2.9 per cent.
The February gold contract was down US$6.60 at US$1,460.80 an ounce and the March copper contract was down 0.15 of a cent at US$2.70 a pound.