Raucous presidential debate has no lasting impact as North American markets end month

TORONTO — A raucous U.S. presidential debate had little lasting impact on stock markets Wednesday as they ended their worst month since March's sizable correction.

The early futures in both Canada and the U.S. decreased significantly after Tuesday's chaotic debate between U.S. President Donald Trump and former vice-president Joe Biden.

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But with nothing new presented on policy, investors latched onto hopeful news from Treasury Secretary Steve Mnuchin about a possible fiscal stimulus deal.

"Once the market sort of digested that early in the morning, we saw a sharp reversal in particular in the U.S. and we saw the TSX go into positive territory as well," said Giles Marshall, portfolio manager at Fiduciary Trust Canada.

"Mnuchin offered some optimism pretty much at the last minute in terms of being able to get a deal done before the election takes place."

Markets lost some of the gains in afternoon trading.

While investors hope a stimulus deal can be reached, the Republicans and Democrats remain far apart, Marshall said.

The S&P/TSX composite index closed down 90.14 points to 16,121.38 after reaching a high of 16,273.75 in morning trading. The index ended September down 1.5 per cent on the month.

In New York, the Dow Jones industrial average gained 329.04 points at 27,781.70. The S&P 500 index was up 27.53 points at 3,360.00, while the Nasdaq composite was up 82.26 points at 11,167.51.

U.S. markets were higher on the day but still down for September.

The Dow lost 2.2 per cent over the month, the S&P 500 was off four per cent and the tech-heavy Nasdaq ended 4.8 per cent lower.

While it wasn't a great month for markets, falling for the first time in several months, it was better than the trajectory in the first half of September, said Marshall.

"Overall, it's been a pretty weak month, but it's had a decent recovery late in the month," he said in an interview.

" I think partly because markets are just looking somewhat oversold, following the first couple of weeks of September where you saw a particularly heavy selling, especially in the technology sector and those kind of companies which have done particularly well through the latter part of the spring and into the summer."

Markets got a little boost Wednesday with the Chicago Purchasing Managers' Index strong-jumping to a 21-month high and U.S. private hiring increasing in September.

Nine of the 11 major sectors on the TSX were lower, including energy and materials.

Energy fell 0.93 per cent despite an increase in oil prices as Vermilion Energy Inc. was down 2.5 per cent and Suncor Energy Inc. was off 1.4 per cent.

The November crude contract was up 93 cents at US$40.22 per barrel and the November natural gas contract was down 3.4 cents at nearly US$2.53 per mmBTU.

The Canadian dollar traded for 74.97 cents US compared with 74.68 cents US on Tuesday.

Oceanagold Corp. lost 9.3 per cent to push materials down on lower gold prices.

The December gold contract was down US$7.70 at US$1,895.50 an ounce and the December copper contract was up 4.25 cents at US$3.03 a pound.

Consumer discretionary slipped despite a 7.6 per cent gain by Canada Goose Holdings Inc. on an analyst upgrade.

Health care and real estate were both up about one per cent on the day, with health care helped by a 3.8 per cent gain from Bausch Health Companies Inc. and REITs moving higher.

Marshall expects markets will remain volatile over the next six weeks depending on the U.S. election results, the path of COVID-19 infections and a fiscal stimulus deal.

"The choppiness could well spill over beyond Nov. 3 if we do have a contested election, which has a decent possibility that's going to happen."

This report by The Canadian Press was first published Sept. 30, 2020.

Companies in this story: (TSX:GOOS, TSX:VET, TSX:BHC, TSX:SU, TSX:OGC, TSX:GSPTSE, TSX:CADUSD=X)

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