The S&P/TSX Composite closed higher, US markets also rose after a volatile day

TORONTO – Canada’s main stock index closed higher on Monday based on fairly broad-based gains, while US stock markets closed higher after choppy trading ahead of the Federal Reserve’s rate decision on Wednesday. The S&P/TSX composite index closed at 176.

TORONTO – Canada’s main stock index closed higher on Monday based on fairly broad-based gains, while US stock markets closed higher after choppy trading ahead of the Federal Reserve’s rate decision on Wednesday.

Paul Harris, portfolio manager at Harris Douglas Asset Management, said the S&P/TSX Composite Index closed 176.50 points higher at 19562.38, with commodity-based stocks rising in particular after showing some relief from recent downward pressure.

“There was a big pullback in some of these areas, and now they’re kind of bouncing back a little bit,” he said.

The base metals index rose about three per cent with First Quantum Minerals Ltd. up four per cent and Tech Resources Ltd. up 3.7 per cent. Gold shares also traded higher, including a gain of nearly 11 percent for Kinross Gold Corp. After it announced the promotion of the stock buyback program.

Energy stocks also helped push the market higher as the November crude contract closed 60 cents higher at $85.36 a barrel, and the October natural gas contract was up a penny at $7.75 per million British thermal units.

“I think oil is really making a difference and that is what is driving stocks in the Canadian market higher,” Harris said.

Harris said gains in commodities may be short-lived, as higher rates and fears of a recession put pressure on such cyclical sectors.

The latest indication about the direction of interest rates comes on Wednesday as the US Federal Reserve prepares to release its latest interest rate decision and accompanying comments. The pending decision comes after higher-than-expected inflation data was released from the US last week, while Canadian inflation data is due on Tuesday.

Uncertainty about how far the Fed will go, and what kind of hints it will give for the coming months, for choppy trading with US markets teetering between losses and gains.

Markets eventually closed higher, with the Dow Jones Industrial Average ending up 197.26 points at 31,019.68. The S&P 500 rose 26.56 points to 3,899.89, while the Nasdaq Composite rose 86.62 points to 11,535.02.

Expectations of a US interest rate hike and some weak Canadian unemployment data put pressure on the Canadian dollar, although the Canadian dollar traded for 75.26 cents in the US on Monday, down only slightly from 75.27 cents in the US on Friday.

Harris said that the Canadian dollar traded above 78 US cents in August, and above 77 US cents at the beginning of last week, but lower oil prices, especially the rise of the US dollar, lowered it.

“The Canadian dollar is in a tough spot because US interest rates are going up, and that has helped the US dollar. I think it’s more strength for the US dollar against the weaker Canadian dollar.”

The December gold contract fell $5.30 to $1,678.20 an ounce and the December copper contract fell by half a pence at $3.51 a pound.

This report was first published by The Canadian Press on September 19, 2022.

Companies in this story: (TSX: GSPTSE, TSX: CADUSD = X)

Canadian Press


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