Energy company strength as oil prices rose back above US$80 per barrel on Monday helped drive a broad rally on the Toronto company Exchange, raising Canada’s main stock index by about 200 points. U.S. stock markets also rose.
According to Stephen Duench, vice-president and portfolio manager for AGF Investments Inc., news of additional economic stimulus in China helped the TSX outperform its American peers.
At 20,025.14, the S&P/TSX composite index gained 189.39 points.
The Dow Jones industrial average in New York increased 213.08 points to 34,559.98. The Nasdaq composite was up 114.48 points at 13,705.13, while the S&P 500 index was up 27.60 points at 4,433.31.
August has generally been a lacklustre, turbulent month, and Monday was the first occasion the S&P 500 closed consecutive days in the green, according to Duench.
In August, there was a significant amount of market consolidation, according to Duench.
“You just get these bounce-back rallies sometimes after those consolidations.”
The remainder of the Canadian banks are scheduled to report results this week, starting on Tuesday, as the earnings season comes to a close. According to Duench, investors will keep paying attention to spending management.
According to Duench, a torrent of economic data will be released in the U.S. soon that will provide investors a better idea of the economic conditions the U.S. Federal Reserve will be working with when making its interest rate decision in September.
According to Duench, the question is whether the recent gradual slowdown will continue and how long the economic strength will last.
After a “balanced” speech by Fed chairman Jerome Powell on Friday, this data-rich week follows.
It will be crucial for investors to be able to sketch out the interest rate trajectory for the remainder of this year because this week is so loaded with economic data.
At the end of the week, the most recent GDP report for Canada will be released.
“They anticipate a slowdown and a decrease month over month. I do believe that would assist bonds, particularly in Canada, if it were that or lower,” said Duench.
Equities have been under pressure recently as a result of rising bond yields.
According to Duench, “bad news is good news” for investors right now when it comes to economic data. Currently, central banks anticipate pausing rates in September and raising them later in the year; nevertheless, these predictions are very susceptible to data fluctuations.
“Investors are also data dependent, and will be watching weeks like this week that are heavy on the economic data front,” he said, adding that this is similar to how central banks operate.
73.55 US cents were paid for the Canadian dollar as opposed to 73.50 US cents on Friday.
The October natural gas contract increased by less than a penny to US$2.67 per mmBTU while the October oil contract increased by 27 cents to US$80.10 a barrel.
The December copper contract was up less than a penny at US$3.79 a pound while the December gold contract was up US$6.90 at US$1,946.80 an ounce.