TSX rises more than 100 points, while U.S. markets close out 8th winning week

Strength in materials and health care stocks helped lift Canada’s main stock index more than 100 points Friday.

Meanwhile, U.S. markets ended the day mixed, but nevertheless closed out their eighth straight winning week.

“It’s another positive week. A great way to finish the year, given everything that happened,” said Philip Petursson, chief investment strategist at IG Wealth Management.

The S&P/TSX composite index closed up 115.46 points at 20,881.19.

In New York, the Dow Jones industrial average was down 18.38 points at 37,385.97. The S&P 500 index was up 7.88 points at 4,754.63, while the Nasdaq composite was up 29.11 points at 14,992.97.

After starting 2023 on shaky footing, with market sentiment “skewed to the downside,” much of the uncertainty investors faced has since been resolved, said Petursson.

“We have now a path forward on interest rates and that’s lower, we know inflation … has been managed,” he said.

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What’s more, economic data continues to suggest that the risk of a recession is behind us, noted Petursson — at least in the U.S., which drives Canadian markets as well.

“I would argue that Canada is likely in a recession,” he said.

Canada’s GDP was flat in October for the third straight month, with Statistics Canada forecasting 0.1 per cent in growth for November.

The latest data comes after the economy shrank in the third quarter.

Canada’s consumer is much more sensitive to interest rate changes because of the way mortgages work compared with the United States, said Petursson, making the overall economy more sensitive as well.

But in the bigger picture, both central banks are heading into 2024 having made significant progress in their fights against inflation, he said. The U.S. will get a smoother landing, but both it and Canada are headed in the right direction.

A pair of reports Friday showed that the U.S. Federal Reserve’s preferred measure of inflation slowed by more than expected in November, while spending by U.S. consumers surprised to the upside.

While investors are entering 2024 with an eye to interest rate cuts, there’s a lot more certainty in knowing what direction the central banks will take next, even if we don’t know when those cuts will begin, said Petursson.

“That then sets us along a new path. We’ve hit an inflection point.”

Looking back, investors will find that 2023 exceeded expectations, he said.

The Canadian dollar traded for 75.43 cents US compared with 75.13 cents US on Thursday.

The February crude oil contract was down 33 cents at US$73.56 per barrel and the February natural gas contract was up three cents at US$2.49 per mmBTU.

The February gold contract was up US$17.80 at US$2,069.10 an ounce and the March copper contract was down a penny at US$3.91 a pound.

— With files from The Associated Press