TORONTO - Canada's main stock index climbed to new heights midweek on a big lift from Shopify Inc. and further easing of concerns about the novel coronavirus.
The S&P/TSX composite index closed up 55.74 points to a record close of 17,832.85 as Shopify shares gained nearly eight per cent.
North American markets hit new highs largely on speculation that the outbreak will be contained, said Candice Bangsund, portfolio manager for Fiera Capital.
"There are some signs that the spread may be easing but also that the impacts to global economic growth will ultimately prove shortlived. So all of this taken together has bolstered investor sentiment and sent equity markets to new highs today," she said in an interview.
Wednesday morning reports said new cases have peaked and that the pace of the spread of the virus may be slowing.
"It's another day of fewer cases being announced so it's lack of escalation that the markets are warming up to."
In New York, the Dow Jones industrial average was up 275.08 points at 29,551.42. The S&P 500 index was up 21.70 points at 3,379.45, while the Nasdaq composite was up 87.02 points at 9,725.96. All three markets set intraday highs.Advertisement
Bangsund said she expects markets are set to surpass some big round numbers before a likely correction to end the bull run takes hold in the next couple of months.
She said the TSX should exceed 18,000 for the first time and doesn't see why the Dow won't reach 30,000 and Nasdaq 10,000 as investors rotate to underappreciated value sectors such as commodities, energy and materials that is inherently positive for Canada.
"This rally has a lot of momentum behind it so it wouldn't be surprising to see another three to four per cent once this thing gets going," she said, noting that investors holding lots of cash are waiting to get back in to equities.
"It's a momentum trade that you don't really want to be on the opposite side of and something that we think will continue to run here in the near term."
Bangsund expects the TSX to gain high single digits in 2020, which will fall below the 19.1 per cent gain in 2019.
"Investors are going to have to be more tactical and agile in their positions. Maybe take some profits when things get overbought but then be prepared to get back in if there is a sizable correction."
She thought a correction would happen in January until the coronavirus unwound overbought conditions in a "healthy selloff that unwound froth in the market."
"I would say within the next one to two months we'll hit those levels where the market is just much too bullish, the easy money will have been made and the market will be vulnerable to a near-term correction."
The Canadian dollar traded for 75.45 cents US compared with an average of 75.23 cents US on Tuesday.
Technology was the best of eight winning sectors on the TSX on Shopify's gains. Energy was up about one per cent as Crescent Point Energy Corp. climbed 2.2 per cent on higher crude oil and natural gas prices.
The March crude contract was up US$1.23 at US$51.17 per barrel and the March natural gas contract was up 5.6 cents at US$1.84 per mmBTU.
Energy prices rose on hope that the improved virus outlook will help Chinese demand. Crude increased even though U.S. inventories for the week rose above expectations.
Health care was driven lower by Aurora Cannabis Inc., whose shares dropped 6.3 per cent.
A 5.3 per cent drop by shares of Centerra Gold Inc. pushed materials lower even though gold and copper prices rose.
The April gold contract was up US$1.50 at US$1,571.60 an ounce and the March copper contract was up 1.7 cents at US$2.60 a pound.
This report by The Canadian Press was first published Feb. 12, 2020.
Companies in this story: (TSX:CPG, TSX:SHOP, TSX:ACB, TSX:CG, TSX:GSPTSE, TSX:CADUSD=X)