S&P/TSX composite closes up more than 100 points, U.S. markets flat

Gains in the energy and financial sectors helped Canada’s main stock index gain more than 100 points, while U.S. stock markets were more subdued but ended the day in the green.

The S&P/TSX composite index was up 106.13 points at 19,306.89.

In New York, the Dow Jones industrial average was up 92.20 points at 32,849.74. The S&P 500 index was up 3.96 points at 3,821.62, while the Nasdaq composite was up 1.08 points at 10,547.11.

The U.S. dollar weakened Tuesday as a result of Japan’s surprise change to its yield curve policy, putting upward pressure on gold, said Philip Petursson, chief investment strategist at IG Wealth Management.

That’s helping boost the TSX, he said, alongside a small rally in the financial sector as the yield curve spread is narrowing.

The TSX’s energy index was up 1.22 per cent, while financials were up 0.72 per cent.

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The Canadian dollar traded for 73.42 cents US compared with 73.24 cents US on Monday.

Retail spending data released Tuesday showed overall spending is slowing in Canada, but Petursson said the Canadian consumer has been relatively resilient in the face of inflation and rising interest rates. However, he expects shoppers to tighten their purse strings more heading into 2023.

Petursson suspects Wednesday’s release of inflation data in Canada for November will be consistent with U.S. trends, perhaps even falling faster than expected.

With the Bank of Canada making clear that any future rate hikes will be based on economic data, a good inflation reading Wednesday would help solidify investor optimism that the tightening cycle is almost over, he said.

“There’s been really just kind of one overriding theme to 2022,” he said.

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“That has been higher inflation, higher interest rates, and that’s been driving the market. And until we get past that, I think the market can’t break out to the upside.”

Petursson thinks inflation’s peak is in the past, but said investors have been cautious as of yet to celebrate given the volatility of 2022.

“I think as far as the TSX is concerned, we’ve seen the downside, and it’s probably behind us,” he said.

The February crude contract was up 85 cents at US$76.23 per barrel and the January natural gas contract was down 53 cents at US$5.33 per mmBTU.

The February gold contract was up US$27.70 at US$1,825.40 an ounce and the March copper contract was up two cents at US$3.80 a pound.