TORONTO — Led by gains in the technology and industrial sectors, Canada's main stock index set new record highs Friday while U.S. markets enjoyed their best week in more than a year.
The positive sentiment followed a hawkish tone from U.S. Federal Reserve when it raised interest rates earlier this week as well as hopes of a ceasefire to the war in Ukraine.
"There seems to be quite a ways potentially to go, but at least it's been moving in that direction. So that is something I think the market has reacted to here over the week," Steve Locke, head of fixed income at Mackenzie Investments said referring to the situation in Ukraine.
"And more than that, I think there's also been a discounting already of some of the risks, particularly coming from central banks."
The S&P/TSX composite index was up 47.25 points to an all-time close of 21,818.47 after reaching an intraday record of 21,877.14.
The Toronto market was up 1.6 per cent for the week and 2.8 per cent so far in 2022 thanks to strength in commodities.
U.S. stock markets posted their best week since November 2020 but remain underwater year-to-date.
The Dow Jones industrial average moved higher for a fifth straight day. It added 274.17 points at 34,754.93 but is down 4.4 per cent in 2022. The S&P 500 index was up 51.45 points at 4,463.12 but is down 6.4 per cent since Dec. 31, while the Nasdaq composite was up 279.06 points at 13,893.84 but remains in correction territory and down 11.2 per cent so far in the year.
"It's been quite a few months since we've had this many positive days and one of the best weeks we've seen in some time so this bounce over the last week has really evened things out a little bit," Locke said in an interview, adding that continued volatility remains likely.
"When we consider the risks that are still around the market, and those would principally be the geopolitical risk coming from the war in Ukraine and the inflation risks that are falling out of that, there's still quite a bit of uncertainty ahead from the market."
He said bond markets had already priced in the movement by the Fed over the past six months so there was a bit of relief with yields falling on Friday.
Technology rose 1.6 per cent with shares of Nuvei Corp. increasing 7.0 per cent, Lightspeed Commerce Inc. up 4.7 per cent and Shopify Inc. 3.8 per cent higher.
Locke said the tech sector, along with real estate development, were helped by an overnight announcement of support out of China stemming from policy changes there.
"Two very large sectors globally and certainly in China so there may have been a bit of a positive follow on from that."
Technology has recovered some of the ground lost when investors sold off growth areas of the market, in favour of more cyclical and valued-oriented areas.
"So that transition if you will having played out in prices for the last few months, we may be seeing just a little bit of relief from that, given how much is already priced in now to the bond curve in terms of Fed rate hikes."
Industrials increased 1.1 per cent with Air Canada up 3.0 per cent.
Energy fell even though crude oil prices increased to remain above US$100 per barrel, with Vermilion Energy Corp. off 3.4 per cent.
The May crude oil contract was up US$1.44 at US$103.09 per barrel and the April natural gas contract was down 12.7 cents at US$4.86 per mmBTU.
The Canadian dollar traded for 79.26 cents US compared with 79.05 cents US on Thursday.
Materials inched fell as gold prices dipped.
The April gold contract was down US$13.90 at US$1,929.30 an ounce and the May copper contract was up 3.8 cents at US$4.74 a pound.
This report by The Canadian Press was first published March 18, 2022.
Companies in this story: (TSX:VET, TSX:NVEI, TSX:LSPD, TSX:SHOP, TSX:AC, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
