North American markets rebound from last week's losses on eve of U.S. election

Ross Marowits
·3 min read

TORONTO — On the eve of the U.S. election, North American stock markets rebounded from last week, which saw the largest decrease since the pandemic-related correction in March.

Some observers believe the shift is tied to U.S. President Donald Trump's rising poll numbers in some key battleground states against Joe Biden, said Allan Small, senior investment adviser at HollisWealth.

But he doesn't buy it.

"I think it's just a matter of everyone came in after the worst week since March when you have such an oversold type of situation," he said in an interview.

"I think the bulls come in and start picking at certain things that are are down."

The S&P/TSX composite index closed up 116.23 points at 15,696.87.

In New York, the Dow Jones industrial average was up 423.45 points at 26,925.05. The S&P 500 index was up 40.28 points at 3,310.24, while the Nasdaq composite was up 46.02 points at 10,957.61.

Small pointed to technology, which is coming off a recovery but which underperformed last week despite some solid earnings by big companies.

It was one of two sectors, along with telecommunications, that fell on Monday, dropping 1.4 per cent with Lightspeed POS Inc. down three per cent.

Health care surged more than six per cent on gains by cannabis stocks. Shares of Aurora Cannabis Inc. increased 16.2 per cent, followed by Cronos Group Inc. at 12.2 per cent, Aphria Inc. at 11 per cent and Canopy Growth Corp. at 10.8 per cent.

More significant for the TSX were 2.2-per-cent increases by the energy and industrials sectors.

Energy moved up following in increase in crude oil prices after last week's weakness, with Whitecap Resources Inc. up 5.3 per cent and Imperial Oil 4.5 per cent higher.

The December crude oil contract was up US$1.02 at US$36.81 per barrel and the December natural gas contract was down 11 cents at US$3.24 per mmBTU.

Increased metals prices moved materials up 1.4 per cent while financials increased on strong bond yields.

The December gold contract was up US$12.60 at US$1,892.50 an ounce and the December copper contract was up almost three cents at nearly US$3.08 a pound.

The Canadian dollar traded for 75.43 cents US compared with 75.09 cents US on Friday.

Small expects markets will respond negatively to the election results if there's no obvious winner, with futures markets falling in early-morning trading.

"If it takes many days to find a new president, the uncertainty in the market will, in my opinion, just hurt the market tremendously."

However, he said markets will ultimately handle whoever wins. Markets will rally if Trump wins or if the Democrats sweep the White House and both houses of Congress.

The latter situation would likely ensure a larger fiscal stimulus package.

"Ideally, I'd love to see a clear-cut winner, whoever it is, so that there is no dispute. But unfortunately, I'm not sure that's gonna happen."

Either way, Small believes the next market catalyst will be COVID-19 vaccines.

"I actually believe that we will see a run-up into the end of the year, once the the vaccine data and information is released from companies like Pfizer."

This report by The Canadian Press was first published Nov. 2, 2020.

Companies in this story: (TSX:LSPD, TSX:ACB, TSX:CRON, TSX:APHA, TSX:WEED, TSX:WCP, TSX:IMO, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press