North American stock markets rise on U.S. stimulus hopes and continued Fed support

·3 min read

TORONTO — North American stock markets continued to grind higher Thursday on new hopes of a U.S. stimulus package and continued support from the U.S. Federal Reserve.

U.S. political leaders suggested they are getting close to a deal that, among other things, would provide payments as unemployment benefits are set to expire.

Investors also continued to respond a day after the central bank said it would continue bond buying.

"Yields are going to remain low, rates are going to remain low and so people that have cash on the sidelines are putting it back to work here," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

"The market just continues to defy gravity and keep drifting higher."

The S&P/TSX composite index closed up 85.52 points to 17,652.94. It reached an intraday high of 17,684.07 that's just 1.6 per cent off February's record high.

In New York, the Dow Jones industrial average was up 148.83 points at 30,303.37.

The S&P 500 index and Nasdaq composite closed at record highs after reaching intraday highs in earlier trading, with the S&P gaining 21.31 points at 3,722.48 and the tech-heavy Nasdaq up 106.56 points at 12,764.74.

Archibald said the move to cyclical and value sectors has taken a breather with the prospect for more lockdowns starting at Christmas amid rising COVID-19 infections and deaths.

U.S. jobless numbers worsened last week, rising to 885,000 from 862,000 the previous week in a trajectory that threatens the economic recovery.

That would have had a bigger impact on markets if the Congress wasn't in the final throes of a stimulus package, said Archibald.

"I think it's being relatively well offset by the fact that we should get some stimulus by Monday at the latest," he said in an interview.

Cheques to unemployed Americans should be a good bridge until more people are vaccinated, a required step to help the economic environment get back to a more normal functioning.

First-quarter global GDP is expected to be challenged in an environment of more lockdowns.

"The work-from-home names, the technology stocks have continued to do quite well and I expect that will continue here for a little bit of time," Archibald said.

Technology climbed 1.5 per cent with CGI Group Inc. gaining 2.6 per cent and Shopify Inc. up 2.2 per cent.

The materials sector increased 2.5 per cent Thursday on higher gold prices with shares of Oceanagold Corp. up nine per cent and Centerra Gold Inc. 6.8 per cent higher.

The February gold contract was up US$31.30 at US$1,890.40 an ounce and the March copper contract was up 4.25 cents at US$3.60 a pound.

Energy was also higher as crude prices continued to rise, pushing MEG Energy Corp. up 2.5 per cent.

The February crude oil contract was up 54 cents at US$48.54 per barrel and the January natural gas contract was down 4.1 cents at nearly US$2.64 per mmBTU.

That helped the Canadian dollar which traded for 78.63 cents US compared with 78.41 cents US on Wednesday.

Five sectors on the TSX were lower led by health care. It lost 1.8 per cent with shares of Aphria Inc. falling 6.2 per cent a day after a deal to unite with Tilray Inc. to create Canada's largest cannabis producer by revenue.

This report by The Canadian Press was first published Dec. 17, 2020.

Companies in this story: (TSX:APHA, TSX:MEG, TSX:GIB.A, TSX:SHOP, TSX:OGC, TSX:CG, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press