Update: TSX Gains 69 Points as Risk-On Sentiment Offsets Declines in Crude Oil & Gold Prices
Canada's main stock market benefited from risk-on sentiment around the world to begin the new month, shrugging off losses in the commodity sector. The S&P/TSX Composite Index was up 69 points or 0.4% to close at 16,068. The TSX was down 75 points Thursday and was up a modest 0.3% for the week. South of the border, U.S. stocks were stronger to end the week, with the Dow Jones gaining 111 points and the Nasdaq up 62 points.
On the TSX, energy sector shares were in the lead despite a 2.5% pull-back in crude oil prices , while financials, industrials and tech were also supportive. Gold stocks were weaker as bullion fell below the $1,300 per ounce mark (down 2.5% for the week) while telecom stocks lost ground after the CRTC hinted that the large national carriers may have to share their wireless networks with smaller competitors.
In stock news , Maxar Technologies (MAXR.TO) slumped 19% after the tech firm posted a near billion-dollar loss and slashed its dividend to one cent a share. Martinrea International (MRE.TO) jumped 12% after the auto supplier's fourth-quarter revenue beat analyst estimates. Heavily traded Bombardier (BBD-B.TO) gained 3.5%. Cannabis stocks were mixed with Aurora Cannabis (ACB.TO) falling 2% and the Green Organic Dutchman (TGOD.TO) adding 9%.
In economic news, an extended stay on the sidelines for the Bank of Canada is supported by the poor showing for Q4 and December GDP on Friday. Notably, the tepid 0.4% gain in Q4 GDP undershoots the BoC's 1.3% estimate, as well as the consensus expectation of a 1% increase. A pull-back in investment drove the slowing in Q4 GDP, which was expected by the central bank. Inventory accumulation provided a sizable lift, but the stage could be set for an inventory liquidation in Q1 that exerts a big drag on GDP.
The temporary slowdown in the economy is mainly due to the oil price drop, which was the driving feature of Q4/Q1 GDP outlook. The Q1 GDP report is a crucial part of the data-driven story that will ultimately decide BoC policy -- further softness seems inevitable in Q1, and a negative print is not out of the question given the downside risk posed by inventories. However, signs of an improvement in M&E investment, some life signs in exports and a pick-up in consumption would help assure the Bank of the temporary nature of the slowdown.
The Canadian dollar plunged two-thirds of a cent to 75.23 US following the one-two punch of disappointing GDP data and weaker oil prices.
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