TSX breaks through 16,000


The S&P/TSX Com­pos­ite In­dex broke above 16,000 for the first time Mon­day, as Cana­dian stocks con­tinue a win­ning streak that be­gan in early Septem­ber.

Canada’s bench­mark stock in­dex closed up 49.27 points at 16,002.78 af­ter climb­ing as high as 16,033.12 ear­lier in the day. The per­for­mance of equities north of the bor­der is well short of the dra­matic rally in U.S. stocks, whether that’s on a one-year ba­sis (S&P 500 up 21 per cent) or over the past decade 67 per cent). But the TSX has out­paced the S&P 500 in both the past three and six months, and Cana­dian stocks may be able to make up even more ground if the next round of earn­ings end up bet­ter than ex­pected.

Sixty-two TSX-listed com­pa­nies are due to re­port this week, in­clud­ing Shopify Inc., WestJet Air­lines Ltd., Brook­field As­set Man­age­ment Inc., Bom­bardier Inc., BCE Inc. and Gen­worth MI Canada Inc.

“The good news is that on­go­ing mo­men­tum seems strong enough to carry the mar­ket to new highs. The bad news is that a fair share of the rally since Septem­ber comes from short-cov­er­ing ac­tiv­i­ties,” Canac­cord Ge­nu­ity port­fo­lio strate­gist Martin Roberge said in a re­cent re­port. He noted that more than 50 per cent of the TSX’s ad­vance since the Septem­ber low can be at­trib­uted to fi­nan­cials. “For the cur­rent ad­vance not to fall into a bull-mar­ket trap like in 2015, we be­lieve mar­ket breadth needs to im­prove ...”

That would likely re­quire in­vestors to em­brace deep cycli­cals such as en­ergy and ma­te­ri­als, some­thing that’s failed to hap­pen de­spite the nearly 30-per-cent rally in WTI crude since June.

Canopy Growth Corp. led the way on Mon­day, jump­ing 19 per cent, af­ter U.S.-based al­co­hol gi­ant Con­stel­la­tion Brands an­nounced it will pay $245 mil­lion for a 9.9-per-cent stake in the Cana­dian cannabis com­pany.

U.S. earn­ings re­ports will also get at­ten­tion from in­vestors since signs are emerg­ing that bottomline growth on the S&P 500 may be more chal­leng­ing next year.

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