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TSX expected to shatter records in 2020 after gaining 2.9 per cent to start year – Yahoo Canada Finance

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TSX expected to shatter records in 2020 after gaining 2.9 per cent to start year

TORONTO — Canada’s main stock index is expected to shatter records in 2020 after starting the year up nearly three per cent to date, says an investment expert.

The S&P/TSX composite index should gain at least 10 per cent for the year, pushing it to about 19,000 points while outpacing U.S. markets, says Macan Nia, senior investment strategist at Manulife Investment Management.

“That is our base case and there’s potential risk to the upside,” he said in an interview after the market capped a strong week by hitting another record high.

Nia said markets are being propelled by stabilization in the global economy and low interest rates which central banks are unlikely to increase in the face of little inflation.

“There’s nothing in near sight that would suggest that the party can’t continue.”

A catalyst for a correction or pullback could be disappointing earnings results, he said, noting that when valuations get high it only takes something minor to get a pullback.

Another could be the result of the Democratic primaries if Bernie Sanders or Elizabeth Warren win the party’s nomination to take on U.S. President Donald Trump.

Either one would provide a “headwind for capital markets” Nia said, noting their calls to break up big tech companies that have driven stock market gains.

Former New York City mayor and businessman Michael Bloomberg and former U.S. vice-president Joe Biden are viewed as the most pro-business among leading candidates.

For now, there’s a lot of optimism as the Phase 1 trade agreement between China and the U.S. has tamed investor anxiety.

The S&P/TSX composite index closed up 74.25 points at 17,559.02 after trading at a record high of 17,572.15.

In New York, the Dow Jones industrial average was 50.46 points at 29,348.10. The S&P 500 index was up 12.81 points at 3,329.62, while the Nasdaq composite was up 31.81 points at 9,388.94.

The TSX gained 1.9 per cent last week and 2.9 per cent year-to-date after gaining more than 19 per cent in 2019.

“A good end to a great week to a great start to the year followed by a great 2019,” Nia said.

Markets were propelled by strong U.S. housing starts that were at the highest level since 2006 and factory output improving 0.2 per cent in December.

Although Chinese economic growth slowed to a 29-year low of 6.1 per cent last year amid a trade war with the U.S., the weakness seems to be normalizing, he said.

“That’s providing optimism for markets that we’re towards the end of this weakening and that we might be seeing an inflection point.”

The Canadian dollar traded for 76.56 cents US compared with an average of 76.66 cents US on Thursday.

The key energy sector was the only one of 11 major sectors on the TSX to fall on Friday, led by a 4.1 per cent decrease in shares of Encana Corp. as natural gas plunged to a near four-year low.

The March crude contract was up five cents at US$58.58 per barrel and the February natural gas contract was down 7.4 cents at US$2.00 per mmBTU.

Materials was part of a broad-based rally, ending the day higher led by First Quantum Minerals Ltd. and Teck Resources Ltd. They climbed on higher gold prices as oil rigs increased in the U.S. for the first time in a couple of weeks and the possibility that 20-year U.S. bonds could weaken the U.S. dollar.

The February gold contract was up US$9.80 at US$1,560.30 an ounce and the March copper contract was down 0.15 of a cent at US$2.85 a pound.

“It just shows the general positive animal spirits for the markets at this point that’s just a continuation of what we saw last year where you’re seeing all sectors rise together.”

This report by The Canadian Press was first published Jan. 17, 2020.

Companies in this story: (TSX:FM, TSX:TECK.B, TSX:ECA, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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U.S. stock futures rise following Friday's omicron-sparked selloff – MarketWatch

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U.S. stock futures rose late Sunday, following a steep selloff Friday sparked by fears of the global economic impact of a worrisome new strain of COVID-19.

Dow Jones Industrial Average futures
YM00,
+0.70%

gained about 230 points, or 0.7%, as of 9 p.m. Eastern. S&P 500 futures
ES00,
+0.92%

and Nasdaq-100 futures
NQ00,
+1.14%

also showed solid gains.

Crude oil futures also rebounded Sunday from a Friday plunge, with benchmark U.S. crude
CLF22,
+5.24%

and Brent crude
BRNF22,
+4.70%
,
the international benchmark, jumping roughly 4% higher.

On Friday, Wall Street suffered its worst day in more than a year amid growing concerns over the new omicron variant of COVID-19. The World Health Organization’s technical advisory group on Friday declared it a “variant of concern,” and a number of countries imposed flight bans from countries in southern Africa, where the variant was first discovered.

Little is known about omicron, but investors Friday braced for bad news.

Read: U.S. health officials urge caution, but not panic, over omicron variant

In a holiday-shortened session, the Dow Jones Industrial Average
DJIA,
-2.53%

slumped 905.04 points, or 2.5%, to 34,899.34, with the index logging its worst daily drop since Oct. 28, 2020, according to FactSet data. The S&P 500 
SPX,
-2.27%

 fell 106.84 points, or 2.3%, to 4,594.62, and the Nasdaq Composite Index
COMP,
-2.23%

 sank 353.57 points, or 2.2%, to 15,491.66.

“The pandemic and COVID variants remain one of the biggest risks to markets, and are likely to continue to inject volatility over the next year(s),” Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services, wrote in a Friday note. “It’s hard to say at this point how lasting or impactful this latest variant will be for markets.”

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Canada to Tap Maple Syrup Reserves to Combat Supply Crisis – TMZ

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Canadians to get biggest drop in gasoline prices since 2009 over COVID variant fears – Yahoo Canada Finance

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Canadians should experience the fastest drop in gasoline prices in nearly 13 years on Sunday as fears about a virulent new COVID-19 variant are expected to provide a break of 11 cents per litre at the pumps.

Dan McTeague, president of Canadians for Affordable Energy, said the national average price could drop to about $1.32 per litre but begin to rise again midweek.

“(Sunday) represents the single largest decrease at the pumps we’ve seen going back to 2009,” he said in an interview.

Global crude oil prices plunged Friday over fears about a new COVID-19 variant called Omicron that prompted Canada to ban entry for foreign nationals who travelled through southern Africa.

The January crude oil contract fell 13.1 per cent or US$10.24 on Friday and currently stands at US$68.15 per barrel.

The decrease came as U.S. stock markets closed early Friday because of the Thanksgiving holiday.

“Sunday and Monday are going to be the best days for Canadians to fill up, including British Columbia,” McTeague said

Even residents of flood-ravaged B.C. will save on the province’s high gasoline prices despite facing rationing because severe flooding has shut both the Trans Mountain pipeline and the province’s lone refinery.

Drivers of non-essential vehicles can only purchase up to 30 litres per visit to a gas station in the Lower Mainland, Sunshine Coast, Sea to Sky area, Gulf Islands and Vancouver Island.

East Coast residents won’t reap the immediate benefits of Sunday’s price drop because its regulated regional system averages price movements. That provides price predictability but blunts price discounts.

Despite the upcoming decrease, national gasoline prices have surged nearly 43 per cent in the past year as the reopening of the global economy from pandemic lockdowns prompted a recovery in crude prices.

McTeague suggested Canadians shouldn’t get too comfortable with the energy savings. He said prices are expectd to increase as OPEC and its allies, who are meeting on Monday, will likely refuse to increase production any further. Energy traders realize that Friday’s decrease was overdone and “flies in the face of fundamentals,” he added.

“My sense is that the decreases that we saw were a little exaggerated and overbought, and for that reason I think we might see a little bit more balance come back to the markets and fundamentals by Wednesday,” McTeague said.

“Unless there’s further unsettling news of greater and further lockdowns, I would expect that oil prices are probably going to recover US$3 to US$4 a barrel by Monday or Tuesday, which means by Wednesday or Thursday we could be looking at increases in the order of four or five cents a litre.”

McTeague said some gasoline savings will continue for a couple of weeks, but he foresees crude climbing back to about US$90 a barrel, which would translate into prices in Canada exceeding $1.50 per litre.

Impending carbon tax increases will further boost prices.

A tax of 2.5 cents per litre, including HST, will take effect on April 1, 2022. It will be followed in December by the clear fuel standard that will add another 18.1 cents per litre including HST, said McTeague.

Adding to the inflation pressure is the Canadian dollar which is less valuable than when it was at par the last time crude prices were around US$80. That reduces the purchasing power for all kinds of products, including energy and food.

The Canadian Automobile Association said that as of early Saturday morning, Manitoba had the lowest average pump price of $1.35/L, followed closely by Alberta at $1.377, while Newfoundland and Labrador was the highest at $1.583 with British Columbia at $1.558.

This report by The Canadian Press was first published Nov. 27, 2021.

Ross Marowits, The Canadian Press

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