Canada’s main stock index extended its November gains on Friday, moving to a new record high, with technology and industrial shares rising as investors welcomed greater clarity about the economic outlook following the outcome of the U.S. election.
The S&P/TSX composite index ended up 104.48 points, or 0.4%, at 25,648.00, eclipsing the record closing high it posted on Thursday. For the month, it was up 6.2%, its fifth straight monthly gain and the largest since November last year. “We’ve climbed that wall of worry,” said Greg Taylor, Chief Investment Officer at Purpose Investments.
“There was a lot of nervousness heading into the (U.S.) election and now we’ve got at least more clarity with what’s going on. We’ve got more confidence that there’s going to be some more growth aspects in the U.S. and that should help earnings as the economy keeps going and regulation falls back.”
U.S. President-elect Donald Trump has pledged to cut taxes and loosen business regulations.
While those measures could boost the economy, the potential for higher fiscal deficits under the Trump administration, as well as inflationary tariff and immigration policies, could reduce prospects for Federal Reserve interest rate cuts and raise long-term borrowing costs, say analysts.
“The big thing everyone is going to be watching is just what happens with (bond) yields and the (U.S.) dollar going forward, because if yields and the dollar keep going higher that’s going to be a pretty big headwind,” Taylor said.
The Canadian dollar posted its third straight monthly decline against its U.S. counterpart in November as Canada’s economy grew just 1% in the third quarter, prompting investors to raise bets on another outsized interest rate cut from the Bank of Canada. The Canadian dollar strengthened 0.1% to 1.40 per U.S. dollar, or 71.43 U.S. cents, after moving in a range of 1.3981 to 1.4045.
For the week, the loonie was down 0.1%, while it was down 0.5% for the month, its third straight monthly decline. On Tuesday, the currency touched a 4-1/2-year low at 1.4177, buffeted by the threat of hefty U.S. tariffs on imports from Canada.
The TSX technology sector added 1% on Friday and industrials were up 0.5%. Seven of 10 major sectors ended higher.
On Wall Street, it was a shortened Black Friday session, lifted by technology stocks such as Nvidia, while retail was in focus as the holiday shopping season kicked off.
Information technology stocks helped boost the benchmark S&P 500 and blue-chip Dow, which was also aided by industrial stocks.
Nvidia gained 2%, while Tesla rose 3.7%.
Investors monitored shoppers’ response to deep Black Friday discounts. Adobe Analytics estimated consumers would spend a record US$10.8 billion in online purchases, up 9.9% from Black Friday last year.
Shares of Target rose 1.7% and Macy’s climbed 1.8%.
The S&P 500 rose 0.56% to 6,032.44 points after breaching its intraday record high of 6,025.42 set on Nov. 26.
The Dow Jones Industrial Average climbed 0.42% to 44,910.65 points. The Nasdaq gained 0.83% at 19,218.17 points.
“Retailers do a lot of importing. Inventory levels are very important to their profitability and ability to kind of control margins, so they will be one of the industries in the (tariffs) crossfire,” said Ross Mayfield, investment strategist at Baird. “But so far ... (things are) looking pretty solid for the Black Friday, Cyber Monday sale.”
Chip stocks rebounded from Wednesday’s declines, sending the Philadelphia SE Semiconductor index 1.5% higher.
The small-cap Russell 2000 index also rose 0.4% as Treasury bond yields retreated further from multi-month highs.
Investors were pricing in expectations that Trump’s pro-business policies could spur economic growth and corporate profits. However, concerns prevailed that they could also stoke inflation, slow the pace of the Fed’s rate cuts and weigh on global growth.
Traders expect the U.S. central bank to lower borrowing costs by 25 basis points at its December meeting, but see it pausing rate cuts in January, the CME Group’s FedWatch showed.
Crypto stocks rose on the back of gains in bitcoin, boosting MARA Holdings by 1.9%.
Applied Therapeutics plunged 76% after the U.S. Food and Drug Administration declined to approve its drug for the treatment of a rare genetic metabolic disease.
Advancing issues outnumbered decliners by a 2.46-to-1 ratio on the NYSE. There were 386 new highs and 63 new lows on the NYSE.
The S&P 500 posted 31 new 52-week highs and no new lows while the Nasdaq Composite recorded 116 new highs and 31 new lows.
Volume on U.S. exchanges was 8.15 billion shares during a shortened trading week, compared with the roughly 15 billion full-session average over the last 20 trading days.
For the week, the S&P 500 gained 1.06%, the Nasdaq rose 1.13%, and the Dow climbed 1.39%. The Russell 2000 Small Cap index rose 1.48%, after hitting a record high earlier in the week.
Reuters, Globe staff