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Canada’s benchmark stock index topped 16,000 points for the first time on Monday, the first trading day since it set a record high on Friday.
When the stock market closed at 4 p.m. ET on Monday, the S&P/TSX Composite Index sat at 16,002.78, up just over 49 points from Friday’s close.
Almost all sectors of the market were higher, led by health care and energy companies. The financial sector, which makes up more than a third of the market, eked out a small gain.
Monday’s gain means the TSX is up by almost five per cent since the start of 2017, a decent showing under normal circumstances but one that currently leaves Canada in the dust of others as global markets have been on a tear.
“The TSX has underperformed almost every major index in the world,” David Baskin, president of Baskin Wealth Management, said in an interview. “The TSX has really lagged up until the last few weeks.”
U.S. stocks are up by more than three times as much as the TSX has risen this year, but much of the U.S. strength comes from the so-called FANG stocks — Facebook, Amazon, Netflix and Google — technology giants that are dragging the whole market up with them.
If you take them out of the picture, “the U.S. performance looks a lot more like Canada’s,” Baskin said. “But we don’t have those tech champions to boost our indices.”
Instead of technology companies, the catalyst for the recent TSX run up is sentiment coming out of the Bank of Canada that it has finished hiking interest rates, for now.
“People are no longer concerned that the Bank of Canada is going to raise rates too far, too fast, and thus cripple the economy by accident,” Baskin said.
A rebounding oil price hasn’t hurt, either. Crude oil was trading at $ 54.15 US on Monday, up 25 cents on the day but up by almost $ 8 since the start of September. That’s almost 18 per cent in less than two months.
Baskin says there’s reason to think the TSX’s rally can continue, as most economic indicators show the economy is doing well.
“As far as we can tell the macroeconomics do support this,” Baskin said. “Probably this is as good as the Canadian economy gets right now.”
While the S&P/TSX Composite Index climbed to a record, U.S. stocks had a down day. The Dow Jones industrial average closed at 23,348.74, down 85.45 points on the day. The broader S&P 500 finished at 2,572.83, down 8.24 points, while Nasdaq shed 2.30 points to settle at 6,698.96.