Canada’s main stock index continued its strong run this year on the back of the pillars of the market — energy, materials and financials.
The S&P/TSX composite index closed up 99.20 points to 15,937.44, after hitting an intraday high of 15,953.90.
After a dismal December, the U.S. and Canadian markets are off to some of the best starts this century, says Craig Jerusalim, portfolio manager at CIBC Asset Management.
The TSX is up 11.3% year-to-date and just 3.8% off its all-time high set last July.
But that doesn’t mean the strong performance will endure. The last two times the TSX started off so strong were in 2000 and 1987.
“And neither one of those two years had good outcomes halfway through the years,” he said in an interview.
On Monday, the Toronto market was driven higher by stronger prices for metals and oil, helped by a weaker U.S. dollar.
The key materials sector gained almost 2% as individual miners saw their stocks gain as much as nearly 10%, led by Turquoise Hill Resources and including Barrick Gold Corp. which was up 4.6%.
They rose as the April gold contract was up US$22.70 at US$1,344.80 an ounce and the March copper contract was up 7.6¢ at US$2.87 a pound.
Jerusalim says gold is approaching a key level as it acts as a hedge against weaker economic growth and lower equities.
“If it breaks through that ever important $1,350 level, there’ll be a lot of momentum investors chasing stocks higher,” he said.
“The historical profitability of the gold producers is quite poor but the length of the current cycle fears of an economic slowdown have refocused investors attention back to the sector, especially in light of some big sign of U.S. trade deadlines that have been earmarked for the beginning of next month.”
Technology was up 1.2% while the energy sector increased by nearly 1% as the April crude contract was up US47¢ at US$56.37 per barrel and the March natural gas contract was up US3.7¢ at US$2.66 per mmBTU.
The Canadian dollar traded at an average of US75.54¢ compared with an average of US75.38¢ on Friday.
The health-care sector was down more than 1% as several large cannabis producers were a drag, with Aphria Inc. falling 3.5% and Canopy Growth Corp. down 2.75%.
In New York, the Dow Jones industrial average was up 8.07 points at 25,891.32. The S&P 500 index was up 4.16 points at 2,779.76, while the Nasdaq composite was up 14.36 points at 7,486.77.
While U.S. markets have mostly underperformed the TSX so far in 2019, American corporate earnings reported in the quarter have far outpaced Canadian companies.
Of the 40% of Canadian companies reporting so far, revenues are up 1% and earnings down 6%. Across the border, 80% of corporations have released their results with revenues rising 6% and earnings up 11%.
Some Canadian heavyweights will report results later this week, including Loblaw, Magna and Royal Bank, added Jerusalim.
“Those earnings reports are going to continue to drive the performance of the stocks.”