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.