S&P/TSX composite rises almost one per cent, U.S. markets also post gains

Canada’s main stock index rose almost one per cent Wednesday amid broad-based strength while U.S. markets also posted strong gains.

“It’s a rather benign day,” said Craig Fehr, investment strategist at Edward Jones.

“We’re seeing markets get a boost from the ongoing deep sigh of relief that the banking crisis, while not over, has seemed to simmer down a little bit,” he said.

“I think that that worst-case scenario has not yet been realized and markets are finding some short-term comfort in that.”

The S&P/TSX composite index was up 180.12 points at 19,837.65

In New York, the Dow Jones industrial average was up 323.35 points at 32,717.60. The S&P 500 index was up 56.54 points at 4,027.81, while the Nasdaq composite was up 210.16 points at 11,926.24.

The Nasdaq has been outperforming the other indexes in recent weeks amid hopes that interest rate hikes are almost over, or could even be cut in 2023, said Fehr.

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“Those markets that were most penalized by the rise in yields last year, specifically the Nasdaq, are now actually starting to benefit as we’re seeing a backup in those yields from the peaks that we saw late last year,” he said.

Fehr said he expects markets to continue their “tug of war” between concerns over an economic slowdown or recession and optimism that inflation will subside.

The TSX posted softer gains Wednesday than its U.S. counterparts mainly due to sector exposure, said Fehr.

Bank of Canada deputy governor Toni Gravelle spoke Wednesday in Montreal, saying the Canadian financial system remains strong but the central bank is prepared to act if the issues in the U.S. banking sector start to spread to Canada.

The speech was mainly aimed at reinforcing confidence in the financial system, said Fehr.

“I do think we are at a stage where policymakers, particularly monetary authorities, are in a position where they need to to instil some confidence in the financial markets and in the banking system.”

The Canadian dollar traded for 73.66 cents UScompared with 73.39 cents US on Tuesday.

The May crude contract was down 23 cents at US$72.97 per barreland the May natural gas contract was up four cents at US$2.18 per mmBTU.

The June gold contract was down US$5.90 at US$1,984.50 an ounce and the May copper contract was up less than a penny at US$4.09 a pound.