Earnings outlook leads market rally

Bank and energy stocks led gains in the Toronto stock market Monday as investors returned from the Easter holiday weekend with an eye towards the upcoming earnings season while seemingly shrugging off growing tension between North Korea and the U.S.

Despite the rising geopolitical risks, the Toronto Stock Exchange’s S&P/TSX composite index climbed 149.41 points to 15,684.89, with nearly all sectors finishing the day in the positive. The Canadian dollar also rose, up 0.07 of a cent to 75.10 cents US.

New York markets were similarly strong with the Dow Jones industrial average gaining 183.67 points to 20,636.92, the S&P 500 index adding 20.06 points to 2,349.01 and the Nasdaq composite index ahead 51.64 points to 5,856.79.

Investors on both sides of the border appeared not to give much weight to harsh words exchanged between North Korea and the U.S. after the Asian country launched a failed missile test on Sunday.

North Korea’s deputy UN ambassador has warned that increasing tension with the U.S. means a nuclear war may break out at any moment and that the country is ready to react to any mode of war desired by the Americans.

U.S. President Donald Trump said North Korean leader Kim Jong Un needs to behave and vice-president Mike Pence said America’s patience is wearing thin with North Korea’s unwillingness to get rid of its nuclear weapons and ballistic missiles.

Canadian markets strategist Craig Fehr said that usually, that type of rhetoric would send stock markets plummeting. But investors seemed to have turned a blind eye to them, and instead are focused on the current corporate U.S. earnings cycle and strong global economic indicators, he said.

“We’ve got equities rising, which is just a refocus on earnings this week, which are likely to be positive,” said Fehr, who works at Edward Jones in St. Louis.