Canada’s main stock index ended up almost 300 points on Friday, buoyed by gains in the base metals sector, while markets in the U.S. were also up.
The S&P/TSX composite index was up 281.66 points at 18,860.95.
In New York, the Dow Jones industrial average was up 748.97 points of 2.5 per cent at 31,082.56.The S&P 500 index was up 86.97 points or 2.4 per cent at 3,752.75,while the Nasdaq composite was up 244.87 points or 2.3 per cent at 10,859.72.
“It’s the first Friday in a number of weeks where we’ve had positive returns,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
“It’s a nice way to end what’s been a reasonably good week.”
Investors are getting the sense that the end of the central banks’ aggressive rate hiking cycle is near, he said.
“To the extent that the interest rate increases start to be less aggressive ? you’ve got a chance to see stocks rally here.”
He said it will be interesting to see whether the Fed goes ahead with its planned 75-basis-point hike at its next meeting.
“I think that’s probably the largest item that we’re going to see here in the next four weeks. And if there is a subtle change to how they’re thinking about policy, that will have a significant reverberating effect on all asset markets.”
Next week will be crucial in terms of setting the tone for the rest of the quarter, said Archibald.
“We have a lot of earnings coming next week in the U.S. and the Canadian market starts to really kick off as well. So we’ll be paying attention to what companies are telling us.”
Canadian National Railway Companyand Canadian Pacific Railway Ltd. are reporting next week, which Archibald said are generally good bellwethers for the Canadian economy. There are also some sizable materials companies, plus utilities and Shopify all releasing financial data next week, he said.
“There’s lots to chew on for investors,” he said.
“Commentary on what 2023 looks like, I think, is going to be most crucial for the direction of equity prices here in the next couple of weeks.”
The Canadian dollar traded for 72.92 cents US compared with 72.84 cents US on Thursday.
Canadian retail sales data for August was released Friday, showing slight gains in sales but with warnings that sales likely dipped heading into the fall.
Archibald said consumers are likely tightening their purse strings as inflation continues its upward trajectory.
The December crude oil contract was up 54 cents at US$85.05 per barrel and the November natural gas contract was down 40 cents at US$4.96 per mmBTU.
The December gold contract was up US$19.50 at US$1,656.30 an ounce and the December copper contract was up 6.4 cents at US$3.47 a pound.
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