TORONTO — Canada's main stock index could be on the path to surpass 17,000 for the first time after investors put money into key sectors like financials and energy to lift the TSX to a record intraday high, says a market observer.
"The bulls and the bears have had a bit of a wrestling match here for the last six weeks and it's resolving itself to the upside so I think there's potential for this to continue to the extent that you don't get more negative headlines out of the China situation," says Mike Archibald, associate portfolio manager with AGF Investments Inc.
The TSX surged for most of the day in reaction to signs of thawing trade tensions between the U.S. and China, along with more stimulus coming from the European Central Bank.
The S&P/TSX composite index rose to 16,696.40, beating the previous high of 16,672.71 set in April. A pullback at the end of the day cut some of the gains as it closed up 32.14 points to 16,643.28, below the highest-ever close of 16,669.40.
In New York, the Dow Jones industrial average was up 45.41 points at 27,182.45. The S&P 500 index was up 8.64 points at 3,009.57, while the Nasdaq composite was up 24.79 points at 8,194.47.
Archibald adds that it's not unreasonable for the S&P 500 to reach 3,100 in six to eight weeks.
"It feels to me like people have been positioned defensively and to the extent that the market keeps going up, it has this self-fulfilling effect of forcing people who have been sitting on the sidelines to start putting money back to work," he said in an interview.
Stock markets rose after the United States delayed a tariff increase on US$250 billion worth of Chinese imports by two weeks as "a gesture of good will" and Chinese importers asked U.S. suppliers for prices of soybeans, pork and other farm goods.
The markets surged early in the day following a report that the Trump administration was considering an interim deal with China, but then fell after a White House official issued a denial.
Markets also moved in reaction to the ECB cutting one key interest rate further below zero, trimming the rate on deposits it takes from banks to minus 0.5 per cent from minus 0.4 per cent, a penalty that pushes banks to lend their excess cash.
"I think investors are extrapolating that the Fed's going to follow suit, and clearly they're going to cut rates next week so you've got the backing of the central banks continuing to take their overnight funding rates lower and prime the pump for more stimulus," Archibald added.
The Canadian dollar traded for an average of 75.73 cents US, compared with 75.87 cents US on Wednesday.
The gains on the TSX were led by the technology sector, which rose 1.1 per cent as Shopify Inc. was up 2.8 per cent.
Financials climbed 0.76 per cent as most companies benefited with Brookfield Asset Management Inc. leading with a 1.7 per cent gain.
Energy was higher, led by Crescent Point Energy Corp. despite a further decrease in oil prices even though Saudi Arabia said that OPEC remains committed to stabilizing the market through production cuts.
However, Iraq and Nigeria openly acknowledged going beyond their allotments while promising further cuts. Estimates similarly show Russia, another heavyweight outside of OPEC, going beyond its allotments, and Iran possibly re-entering the global market.
The October crude contract was down 66 cents at US$55.09 per barrel and the October natural gas contract was up 2.2 cents at US$2.57 per mmBTU.
Health care dropped 2.2 per cent as Aurora Cannabis shares lost 8.9 per cent after missing its own revenue guidance.
Materials was also lower despite an increase in gold prices. The December gold contract was up US$4.20 at US$1,507.40 an ounce and the December copper contract was up 2.6 cents at US$2.64 a pound.
— With files from The Associated Press.
Companies in this story: (TSX:SHOP, TSX:ACB, TSX:CPG, TSX:BAM.A, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press