Canada’s main stock index inched up to another record high on Friday as energy shares rose and after a trade deal between Canada and China that could be supportive of the economy.
The S&P/TSX Composite Index ended up 11.63 points, or 0.04%, at 33,040.55, edging past Thursday’s record closing high. For the week, the index was up 1.3%, lifting its gain since the beginning of the year to 4.2%.
“Markets are rational. They’re looking at what really matters from fundamentals instead of just chasing the headlines on a daily basis,” said Angelo Kourkafas, a senior global investment strategist at Edward Jones.
“Looking at economic growth, profit growth or the outlook for the Fed to lower rates gradually, helping global liquidity - all that remains supportive.”
The swap market is largely pricing in two interest rate cuts from the Federal Reserve this year. Canada and China have struck an initial trade deal that will slash tariffs on electric vehicles and canola, Prime Minister Mark Carney said, as both nations promised to tear down trade barriers while forging new strategic ties.
“I think that is a positive for the economy as Canada of course is looking for alternative sources for its products as clearly the relationship with the U.S. is not what it used to be,” Kourkafas said.
The energy sector rose 0.9%, helped by U.S. crude futures which settled 0.4% higher at $59.44 a barrel on lingering worries over supply risks.
Industrials also added 0.9%, with space- technology firm MDA Space up 14.5% after Morgan Stanley upgraded its stock to “overweight” from “equal-weight.”
Six of the 10 major sectors ended lower, including technology, which was down 1.2%.
The materials sector, which includes metal-mining shares, fell 0.5% as the prices of gold and copper pulled back from the record highs they made earlier in the week.
Capital Power Corp shares were down 6.6%. Reuters reported that governors from U.S. states will visit the White House on Friday to sign an agreement with the Trump administration intended to curb rising electricity costs.
U.S. stocks ended nearly flat in a choppy session ahead of the long weekend, although all three major indexes posted losses for the week as fourth-quarter earnings season kicked off.
Healthcare fell 0.8% and led declines for the day among S&P 500 sectors. Shares of chipmakers rose, with an index of semiconductors gaining 1.2% and extending gains from Thursday.
Big U.S. banks posted mostly solid results this week as the S&P 500 reporting period got under way. Still, shares of banks and other financial institutions have been pressured by worries over U.S. President Donald Trump’s proposed one-year cap on credit card interest rates at 10%. The S&P 500 financial sector ended up 0.1% on Friday but posted its biggest weekly percentage decline since October.
Investors also digested news that Trump said he may want to keep economic adviser Kevin Hassett in his current role, lowering market bets that Hassett would succeed Federal Reserve Chair Jerome Powell.
“To finish the week around flat with the S&P 500 still within spitting distance of 7,000 - most investors will take that as a win two weeks into the year,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
“One of the other reasons markets have been flat-lining is we’re at the start of the earnings season,” he said. “Bank earnings are showing a generally favorable economic and business backdrop. Now we’re going to start seeing other companies tied to other sectors, and that’s going to give us a better take on fundamental conditions.”
The Dow Jones Industrial Average fell 83.11 points, or 0.17%, to 49,359.33, the S&P 500 lost 4.46 points, or 0.06%, to 6,940.01 and the Nasdaq Composite lost 14.63 points, or 0.06%, to 23,515.39.
For the week, the S&P 500 was down 0.38%, the Nasdaq declined 0.66% and the Dow fell 0.29%.
The earnings season ramps up next week with reports from heavyweights including Netflix, Johnson & Johnson and Intel.
Investors were also cautious of making big bets ahead of the long weekend, with the stock market shut on Monday for the Martin Luther King Jr. holiday.
While stocks have largely traded in a relatively tight range in recent sessions, some options market participants expect more choppy price action in coming days following Friday’s monthly options expiration.
“Historically the middle part of January tends to be pretty choppy,” said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts.
“Once we work our way through that, then we are likely to see a little bit better performance out to the end of the month. Hopefully, we’ll find the month positive,” which could suggest positive performance for the year, Zaro said.
The week also saw money shifting out of some heavyweight tech names into more undervalued areas, with mid- and small-cap stocks outperforming the benchmark S&P 500.
The small-cap Russell 2000 reached another record closing high on Friday and gained 2.04% for the week.
Most of the major S&P 500 sector also ended with gains for the week, with real estate, consumer staples and industrials leading in weekly increases.
Declining issues outnumbered advancers by a 1.19-to-1 ratio on the NYSE. There were 423 new highs and 64 new lows on the NYSE.
On the Nasdaq, 2,034 stocks rose and 2,719 fell as declining issues outnumbered advancers by a 1.34-to-1 ratio.
Volume on U.S. exchanges was 18.77 billion shares, compared with the 16.85 billion average for the full session over the last 20 trading days.
Reuters, Globe staff