Positive sentiment pushes TSX higher and U.S. stock markets to record highs

TORONTO — North American stock markets started the week stronger with U.S. markets setting all-time highs on positive sentiment that bodes well for the rest of the year, says a market analyst.

"There could always be time for some volatility but it feels like there's a bit of a window to move higher in the year-end. I'm not really sure what would derail it," said Greg Taylor, chief investment officer of Purpose Investments.

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While everyone's waiting for a repeat of last December when markets plummeted, economic conditions seem better with talk of recession fading following strong U.S. jobs numbers on Friday and corporate earnings not being as bad as feared, he said.

The S&P/TSX composite index closed up 75.74 points to 16,669.81, its highest closing in more than a month, as energy stocks climbed.

In New York, the Dow Jones industrial average was up 114.75 points at 27,462.11 after setting a record high earlier in the day of 27,517.58. The S&P 500 index was up 11.36 points at 3,078.27 with an intraday high of 3,085.20, while the Nasdaq composite reached 8,451.37 before closing 46.80 points at 8,433.20.

U.S. President Donald Trump touted the stock market performances by tweeting: "Stock Market hits RECORD HIGH. Spend your money well!"

While the TSX is up 16.4 per cent so far this year, the Dow has risen 17.7 per cent, the S&P 500 22.8 per cent and Nasdaq 27.1 per cent.

"It doesn't really feel that euphoric because we still have to get over the shock of what happened last December," Taylor said in an interview.

"And a lot of people sold into that so they've missed out on a lot of this move this year which is partly what's going to fuel this move higher if we get it into the next few months as those people come back to the market."

On Monday, the TSX was helped by a 3.2 per cent increase in the energy sector as shares of Encana Corp. gained 7.9 per cent.

Canadian energy stocks, which represent a big portion of the market, have lagged and weighed down the performance of the TSX. But they got a big bounce Monday which could be a sign of a better performance ahead, said Taylor.

"Maybe this will be time for Canada to play some catch up," he said.

The sector's increase was helped by natural gas prices which reached their highest level since March.

The December crude contract was up 34 cents at US$56.54 per barrel and the December natural gas contract was up 10.7 cents at US$2.82 per mmBTU.

Industrials was pushed higher by Bombardier Inc. shares gaining 7.7 per cent while the heavyweight financials sector increased 0.7 per cent as IGM Financial Inc. gained 4.4 per cent.

Taylor said the financials sector is the perfect cyclical investment that will benefit as global growth picks up.

Materials was one of five sectors that lost with gold prices falling. The December gold contract was down 30 cents at US$1,511.10 an ounce and the December copper contract was up 1.8 cents at US$2.67 a pound.

The Canadian dollar traded for 76.06 cents US compared with an average of 76.01 cents US on Friday.

This report by The Canadian Press was first published Nov. 4, 2019.

Companies in this story: (TSX:BBD.B, TSX:IGM, TSX:ECA, TSX:GSPTSE, TSX:CADUSD=X)

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