S&P/TSX Composite Ends Trading Week With Winning Streak
Canada’s leading stock index ended the first half of the year well, with triple-digit gains heading into the three-day weekend, while US stock markets also rose higher.
The S&P/TSX composite index closed 242.12 points higher on Friday at 20,155.29, ending a week of gains across the board, particularly in the industrials, technology and consumer discretionary sectors.
South of the border, markets rose as well. In New York, the Dow Jones industrial average rose 285.18 points to 34,407.60. The S&P 500 index rose 53.94 points to 4,450.38, while the Nasdaq index rose 196.59 points to 13,787.92.
It was a “great” second quarter for the US markets, said Mike Archibald, vice president and portfolio manager at AGF Investments Inc. The S&P 500 index is up nearly eight percent from the quarter, while the Nasdaq index is up nearly 13 percent.
While the TSX has not performed as well in comparison due to the high concentration of energy stocks – an industry that has been weighed down by falling crude prices in recent months – markets on both sides of the border have outperformed over the first six months than expected. from 2023.
“The first half of this year has been a big surprise for many people. There’s still a lot of money being put to work here, and that’s clearly what we’re seeing here today,” said Archibald.
Investors feel optimistic midway through the year, Archibald said, because an economic recession hasn’t happened yet.
For much of the past year, rate hikes by central banks fueled fears that the economy could face a hard landing. But as inflation cools — Canada’s consumer price inflation was 3.4 percent in May, the lowest inflation rate the country has seen in nearly two years — many investors think the end of the rate hike cycle is near.
That could mean the global economy can evade the recession many have predicted, Archibald said.
“I was definitely in the risk-on camp,” Archibald said. “Personally, I think the market will continue to move up.”
Even crude oil, which has lost about $10 a barrel since April on fears of global economic contraction, took a bump on Friday, closing above $70.
Archibald said the surge in oil prices at the end of the week is likely more related to a weaker US dollar than anything else, but added that the longer a feared recession is delayed, the more likely it is that crude prices will recover. oil will recover.
“If we get more definitive data that the economy is not in recession and we’re going to have a soft landing, I think we’re going to see a very aggressive catch-up in energy stocks. I just don’t know when that’s going to happen,” he said.
Heading into the second half of the year, the company’s second-quarter financial results will be the “big wild card” when it comes to stocks, Archibald said.
Once earnings reports start rolling in in the coming weeks, investors will have a better sense of whether their outlook for the economy is correct.
“I don’t want to sound overtly bullish, but I think the runway for equities is pretty good,” he said.
“If revenues rise, then I think good times are ahead here.”
The Canadian dollar traded at 75.53 cents US compared to 75.44 cents US on Thursday.
The August crude oil contract rose 78 cents to $70.64 a barrel and the August natural gas contract rose nearly 10 cents to $2.80 per mmBTU.
The August gold contract was up $11.50 to $1,929.40 an ounce and the September copper contract was up six cents to $3.76 an ounce.
This report from The Canadian Press was first published on June 30, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
