TORONTO — Canada's main stock index crept higher on Friday as the loonie popped above 77 cents in afternoon trading.
The S&P/TSX composite index was up 45.22 points at 17,396.56. The Canadian dollar traded for 77.01 cents US compared with 76.85 cents US on Thursday.
The S&P 500 rose to a record high Friday on a short trading day in New York, after the Dow Jones industrial average crossed 30,000 for the first time earlier in the week.
On Friday, the Dow Jones industrial average was up 37.90 points at 29,910.37, the S&P 500 index was up 8.7 points at 3,638.35, while the Nasdaq composite was up 111.44 points at 12,205.85.
The rally to record highs came despite market closures for Thursday’s U.S. Thanksgiving holiday and an early end to trading on Friday.
“The overall sentiment in equities we've seen since the (U.S. presidential) election is much more positive —positive expectations on the economy, as a result of vaccines as a result of closure with the election, perhaps less volatility, and less geopolitical risk coming out of the White House,” said Philip Petursson, chief investment strategist at Manulife Investment Management.
“Investors are really looking at the environment as if the glass is half full.”
The TSX, however, remains a few hundred points shy of its February record high of 17,970.51.
Canada’s biggest city, Toronto, has limited non-essential shopping during the key holiday season amid a spike in cases of COVID-19, and Prime Minister Justin Trudeau said more than half of Canadians will be inoculated by next September “if all goes well,” amid limited domestic vaccine manufacturing capacity.
“It's just a matter of time, and that's really what the markets are focused on — markets being a forward-looking mechanism,” said Pertusson.
“Despite the lockdowns that we're going through right now in Toronto, Peel or other areas of the country — despite the fact that we don't have the vaccine readily available this year, it’s coming. The environment is incrementally improving.”
Petursson said the Canadian dollar was the “key thing” he was watching on Friday.
“The Canadian dollar has been entirely lined up, in our view, with oil prices,” said Petursson.
The January crude contract was down 18 cents at US$45.53 per barrel and the January natural gas contract was down nearly 12 cents at US$2.84 per mmBTU. Although energy prices edged lower on Friday, Petursson said it was a good month for the sector, as crude prices have pushed gradually closer to $50 a barrel.
“It’s both supply that looks like it's tightening up, and demand that looks like it's improving...on the back of a continually improving economic environment: a return to normal, which is a return to the workplace and return to travel,” said Petursson of oil prices.
The health care sector rose 4.89 per cent on Friday, led by a nearly 18 per cent jump in shares of Aurora Cannabis Inc. and a 7.36 per cent jump in Canopy Growth Corp. Petursson attributed the upswing to the potential for a vote on decriminalization of cannabis in the United States.
The February gold contract was down US$23.10 at US$1,788.10 an ounce and the March copper contract was up nearly nine cents at almost US$3.42 a pound.
Petursson said he has been watching the move in gold alongside more pronounced volatility in Bitcoin prices. Both gold and Bitcoin could be ways investors protect their investments as central banks lower interest rates, he said.
Heading into the Cyber Monday shopping sales, Petursson said it’s important for investors to remember that a month of holiday shopping remains, and not to get too fixed on one or two days of sales.
While the gift-giving season could be dampened by the economic downturn caused by COVID-19, Petursson said shoppers could end up being unexpectedly upbeat by this time next month.
“So far, we're not seeing any weakness on the side of the consumer in Canada or the states. In fact, they continue to surprise to the upside,” said Petursson.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X, TSX:ACB, TSX:WEED)
Anita Balakrishnan, The Canadian Press