TORONTO – Canada’s main stock index was essentially flat on Thursday as investors backed off amid concerns over rising COVID-19 infections and pocketed some profits after a few solid weeks of trading.
“I think we’re just digesting the gains we’ve seen from this strong month-to-month surge for the TSX,” said Mike Archibald, vice president and portfolio manager at AGF Investments Inc. .
The S & P / TSX Composite Index closed 19.99 points higher at 16,909.81 and is 8.5% higher so far in November.
In New York, the Dow Jones Industrial Average rose 44.81 points to 29,483.23. The S&P 500 Index rose 14.08 points to 3,581.87, while the Nasdaq composite rose 103.11 points to 11,904.71.
The day was marked by a shift from cyclical stocks to technology stocks and home stocks in Canada and the United States.
Archibald said it was natural for investors to take profits after finance and energy, in particular, exploded in the past two weeks.
Markets got a little boost in the afternoon on reports that U.S. Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi had resumed discussions around a COVID stimulus bill.
Archibald said the market is aware that a deal is unlikely to happen until Joe Biden becomes president on January 20.
“Nonetheless, every time you get one of these titles there is a little bit of optimism and that seems to be what takes the S&P higher here,” he said in an interview.
The coronavirus remains a concern as infections increase even before winter arrives, resulting in more global lockdowns that could dampen broader economic growth.
“So I can understand why there is a return to some of the more scalable parts and work-from-home names today,” Archibald said.
However, the closer we get to massive inoculations by mid-2021, the more likely there is to be a sustainable rally in sectors like industry, finance and energy, has t -he declares.
Until then, there is probably a greater risk of an “economic malaise” that will force the market to re-price expectations as the current outlook is positive for the fourth and first quarters, Archibald said.
“I think the next few weeks here there’s a risk that we will get a slight pullback from this solid move, and then you’ll probably get your strong seasonal move at the end of the year.”
Meanwhile, markets saw no direction in the share of weekly US job applications, which edged up to 742,000, but continuing applications declined slightly.
Tech dominated the TSX, gaining 1.2 percent, with several names higher, including Shopify Inc. which climbed 3.6 percent.
Materials fell the most, losing less than a percentage point as gold prices fell.
The December gold contract fell US $ 12.40 to US $ 1,861.50 per ounce and the December copper contract rose 0.4 cents to US $ 3.20 per pound.
The industry fell despite an 11.1% gain from Norbord Inc. after receiving a $ 4 billion takeover bid from West Fraser Timber Co. Ltd.
Energy also fell as crude prices fell, hurting several Canadian oil producers. The shares of Seven Generations Energy Ltd. and Canadian Natural Resources fell by 2.2 and 1.7 percent, respectively.
The January crude contract fell 11 cents to US $ 41.90 per barrel and the December natural gas contract fell 12 cents to US $ 2.59 per mmBTU.
The Canadian dollar traded at 76.44 US cents compared to 76.55 US cents on Wednesday.
This report by The Canadian Press was first published on November 19, 2020.