S&P/TSX composite ticks higher, U.S. markets mixed ahead of holiday

TORONTO — Canada's main stock index ticked higher Wednesday after a mixed day for U.S. markets, as investors paused to digest the week's record-setting rally ahead of a U.S. holiday tomorrow.

The S&P/TSX composite index closed up 38.82 points at 17,313.07, while in New York, the Dow Jones industrial average was down 173.77 points at 29,872.47, falling below the 30,000 mark it hit for the first time earlier this week.

"It’s been quite a wild month. We had the Dow hit 30,000, we had different sub-indices like energy and banks have their best months in years," said Greg Taylor, chief investment officer of Purpose Investments.

"The market was due for a bit of a pause, and you’ve also got U.S. Thanksgiving holidays starting tomorrow, and a lot of people travel on Wednesday."

The S&P 500 index was also down 5.76 points at 3,629.65. Taylor said the prominence of energy companies in the TSX has boosted it compared to U.S. counterparts, although energy companies’ shares ended the day less than one per cent lower.

The January crude contract was up 80 cents US at US$45.71 per barrel and the January natural gas contract was up more than six cents US at about US$2.96 per mmBTU.

"The big story, I think, for Canada for the last few weeks has been the bounce-back in energy prices," said Taylor.

"A lot of people are realizing that with the benefit of the vaccines, and further economic stimulus coming, that energy and banks could have a fairly good run next year."

Taylor also pointed to Wednesday’s better-than-expected earnings report from BRP Inc., which makes Ski-Doo and Sea-Doos. Shares of the company ended the day 3.25 per cent higher in Toronto.

"They had a really good quarter, and that just speaks to the amount of pent-up demand for people buying recreational products and different things for outdoor activities," said Taylor.

"That theme has been going on through the pandemic, and that’s a good example of a Canadian company that’s benefiting from it."

Meanwhile, the tech-heavy Nasdaq composite was up 57.62 points at 12,094.40. Taylor said that Wednesday’s headlines about Salesforce.com Inc. buying Slack Technologies, Inc. could be a bellwether for further deals in the sector.

"Certainly, we have seen the tech stocks underperform, but they're coming back a little bit today," said Taylor. "We could start to get some excitement in the tech stocks again. They are still really some of the best business models out there."

The Canadian dollar traded for 76.91 cents US compared with 76.73 cents US on Tuesday. Taylor said that the Canadian dollar could benefit from increasing investor appetite for risk, but said that investors may also be limited by uncertainty around government spending.

The December gold contract was up 90 cents at US$1,805.50 an ounce and the December copper contract was up one cent at nearly US$3.31 a pound.

"Gold is interesting because it’s a commodity that has definitely lagged this month. It has been one sector that's really underperformed in one of the best months the TSX has had in a long time," said Taylor.

"Gold has had a good year. But I think there are people that were using it as an insurance policy, and they were selling that to buy some of the other commodities, like copper or even energy … Now, we could be seeing some people come back to the sector."

This report by The Canadian Press was first published Nov. 25, 2020.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X, TSX:DOO)

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