BNN Bloomberg's closing bell update: December 3, 2020
TORONTO - Canada's main index crept higher again Thursday on a broad-based rally as investors continued to digest November's solid gains.
The S&P/TSX composite index closed up 39.81 points to 17,398.02. It reached an intraday high of 17,452.85 that's 2.9 per cent below February's record level.
The market is looking for the next catalyst to determine its path forward, said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
“Clearly we're getting into the part of the calendar where volumes typically start to lighten up a little bit and the seasonal tailwinds of December are usually pretty good,” he said in an interview.
“So it wouldn't surprise me still to see a bit of a pause here, just given how strong November was, but in terms of today, it continues to be just a slight grind higher, which is really what we've seen for the last week and a half.”
Vaccines and a U.S. stimulus packages remain key drivers of broader market sentiment as they would help the economy to return to normalcy following the impact of COVID-19.
A quicker pace of inoculations will favour reopening sectors such as energy, industrials, financials and materials. Technology and stay-at-home names will likely underperform.
Archibald expects a U.S. stimulus package will come in the next six to eight weeks as the Democrats and Republicans argue over its size.
“The question is, does that happen before Christmas where the need is the greatest or does it happen after inauguration,” he said.
Archibald said he expected more profit-taking coming into December before a typical Santa Claus rally as the year winds down.
“The market does remain fairly overbought here in the short-term. So, I think it it pays to be a little bit patient before really, aggressively putting more capital, to work,” he said.
In New York, the Dow Jones industrial average was up 85.73 points at 29,969.52. The S&P 500 index was down 2.29 points at 3,666.72, while the Nasdaq composite was up 27.81 points at 12,377.18. Both of these markets hit record highs in earlier trading.
The Canadian dollar traded for 77.64 cents US compared with 77.32 cents US on Wednesday when it reached its highest level since October 2018.
Ten of the 11 major sectors of the TSX were higher.
Industrials were pushed up by WSP Global shares surging 11.6 per cent following a $1.5-billion deal to buy Ontario's Golder Associates. Air Canada's shares were up 5.2 per cent.
Energy was on the upswing after OPEC plus Russia agreed to increase oil production by 500,000 barrels a day from January and said they would meet monthly to decide further output levels.
“We're not flooding the market with more oil at the moment, which I think is a good thing because, demand has clearly not fully recovered,” Archibald said.
And the fact that the cartel was able to reach an agreement shows that countries can continue to work together to bring supply back onto the market in a “rational fashion.”
Shares of Crescent Point Energy Corp. responded by increasing 3.4 per cent while Suncor Energy Inc. and Canadian Natural Resources Ltd. were up 1.8 and 1.4 per cent, respectively, on high volumes.
The January crude contract was up 36 cents at US$45.64 per barrel and the January natural gas contract was down 27.3 cents at nearly US$2.51 per mmBTU.
Materials was the lone losing sector, falling 0.55 per cent even though gold prices rose on the prospect of more deficit spending on stimulus in the U.S.
The February gold contract was up US$10.90 at US$1,841.10 an ounce and the March copper contract was up 0.15 of a cent at US$3.49 a pound.