Friday saw a gain of more than 100 points on Canada’s main stock index thanks to strength in commodities and health care firms.
Even though American markets had a mixed day’s finale, they concluded their seventh consecutive week of gains.
“This week has been good again. Given all that transpired, it was an excellent way to end the year, according to IG Wealth Management chief investment strategist Philip Petursson.
At 20,881.19, the S&P/TSX composite index ended the day up 115.46 points.
The Dow Jones industrial average in New York fell 18.38 points to 37,385.97. The Nasdaq composite was up 29.11 points at 14,992.97, while the S&P 500 index was up 7.88 points at 4,754.63.
Since the beginning of 2023, when the market was “skewed to the downside,” most of the uncertainty that investors were facing has been cleared out, according to Petursson.
“We know inflation has been controlled, so we have a lower path ahead for interest rates,” he stated.
Furthermore, according to Petursson, economic indicators continue to point to the possibility of a recession being over, at least in the United States, which influences Canadian markets as well.
He declared, “I would argue that Canada is probably in a recession.”
For the third consecutive month, Canada’s GDP shrank in October. Statistics Canada predicts 0.1% growth in November.
The third-quarter economy contraction precedes the release of the most recent statistics.
According to Petursson, the way mortgages are structured in Canada differs significantly from that in the US, making consumers far more susceptible to fluctuations in interest rates. This heightened sensitivity also affects the broader economy.
However, he pointed out that overall, both central banks are approaching 2024 having achieved great strides in their battles against inflation. Although the U.S. will land more smoothly, Canada and the United States are both moving in the right way.
Two data released on Friday revealed that while consumer spending in the United States surprised to the upside, the Federal Reserve’s preferred gauge of inflation slowed down more than anticipated in November.
Even if we don’t know when the central banks will start cutting interest rates, investors are looking ahead to 2024 with an eye on interest rate reductions, according to Petursson.
That then takes us in a different direction. We’ve reached a turning moment.
Investors will discover, looking back, that 2023 outperformed expectations, he claimed.
On Thursday, the value of the Canadian dollar was 75.43 cents US, down from 75.13 cents US on Thursday.
The natural gas contract for February increased by three cents to US$2.49 per mmBTU, while the crude oil contract for February fell 33 cents to US$73.56 per barrel.
The March copper contract fell a cent to US$3.91 while the February gold contract increased by US$17.80 to US$2,069.10 an ounce.