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Canada Stocks Eke Out Gains As U.S. Law Makers Inch Towards Budget Agreement

Just as U.S. law makers seemed to inch closer through the day to resolving the impasse over hundreds of billions of dollars in tax increases and spending cuts, so too Canada's main stock market, the Toronto Stock Exchange, inched up through most of the day to eventually close it nearly 120 points ahead.

Just as the market closed, Reuters was reporting U.S. lawmakers were pushing for a last-minute agreement to avoid the so-called 'fiscal cliff' that could put the U.S. economy into recession.

According to Bloomberg, even if they reach a last-minute budget agreement, it would be short of the so-called grand bargain of deficit reduction lawmakers envisioned. Instead, it said, a deal would be the least common denominator, blunting only some of the recession-causing policies Congress imposed as unthinkable consequences to force compromise. Further, it added, any deal reached just before or after tonight's deadline would set another deadline in early 2013 when lawmakers will again fight over the debt ceiling.

Most investors and traders appear to have sat on the sidelines Monday while the U.S. budget dispute played itself out. Less than 100 million shares changed hands on the TSX and the most actively traded individual stocks saw less than 4 million shares traded, which is far less than is often the case.

Crude oil futures rose Monday, with investors eyeing the possibility that U.S. lawmakers will craft a budget deal ahead of Monday night's deadline, MarketWatch reported. Crude for February delivery rose US$1.02 to settle at $91.82 a barrel on the New York Mercantile Exchange. Oil prices still logged their first annual loss in four years and the market faced some uncertainty in early 2013 as the U.S. economy may be hit by certain tax increases and spending cuts. For 2012, crude-oil prices fell 7.1%.

Gold futures rose Monday, with investors ending the final trading day of 2012 with some optimism about tax rates as Washington raced to meet a deadline to avert automatic tax increases and spending cuts set to go into effect Jan. 1, MarketWatch reported. Gold for February delivery rose US$19.90 to settle at $1,675.80 an ounce on the Comex division of the New York Mercantile Exchange. February gold traded as high as $1,681.00.

Gold finished the year with an annual gain of 7%, the twelfth consecutive yearly rise for the precious metal, but the smallest annual gain since 2008.

March silver futures closed up 0.8% at $30.23 an ounce, marking a gain of 8.3% for 2012.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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