Volatile week ends with market gains
The Toronto stock market closed modestly higher at the end of a volatile week amid a partial U.S. government shutdown that was in its fourth day Friday and an approaching deadline when the U.S. government hits its debt limit.
The S&P/TSX composite index was ahead 23.53 points to 12,758.65, led by beaten-down mining stocks, while the Canadian dollar was up US0.32¢ to US97.16¢.
U.S. indexes turned higher as the Dow Jones industrial average climbed 76.1 points to 15,072.58, Nasdaq gained 33.41 points to 3,807.75 and the S&P 500 edged up 11.84 points to 1,690.50.
But for the week, North American markets ended lower amid fears that an Oct. 17 deadline for raising the U.S. government’s debt ceiling could be more disruptive than the partial shutdown.
“I guess I take a simplistic view that it’s not in anyone’s interest, Republicans or Democrats, to be blamed for a default,” said Ian Nakamoto, research director at 3MACS.
“There has to be some sort of resolution and like most resolutions, it will come at the very end. We could be in this see-saw patter to the middle of October and there could be a couple of scary down days.” The TSX shed 0.66% and the Dow industrials fell 1.22 % over the past week.
Markets initially took the partial shutdown of non-essential government services well, with traders hoping it would be shortlived.
But investor anxiety has risen as Republicans in the House of Representatives continue to insist on changes to so-called ObamaCare while President Barack Obama refuses to consider any deal linking his signature health-care legislation to routine legislation needed to fund the government.
The U.S. Treasury Department warned Thursday that a default could cause U.S. credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket.
Mining stocks provided most of the lift on the TSX after losing substantial ground during this week. The base metals sector rose 1.17% while December copper was up US3¢ to US$3.30 a pound. Teck Resources was ahead 54¢ to $27.86.
The energy sector was up 0.74% with the November crude contract on the New York Mercantile Exchange rising US53¢ to US$103.84 a barrel as offshore oil rigs in the Gulf of Mexico braced for tropical storm Karen. Some 20% of U.S. oil production is sourced from the Gulf of Mexico. Suncor Energy Inc. climbed 44¢ to $36.69.
Gold stocks led decliners, down about 0.7% with December bullion down US$7.70 to US$1,309.90 an ounce. Kinross Gold faded 7¢ to $4.94.
The tech sector was also weak with BlackBerry Ltd. off 9¢ at $7.88.
The smartphone maker expects to receive a US$500-million tax rebate within the next year. It wasn’t clear from a regulatory filing whether the bulk of the tax refund would come from Canada, where the global smartphone company is based, or another jurisdiction.
A major TSX gainer was Air Canada. Its shares shot up 52¢, or 13.1%, to $4.49 on very heavy volume of 10.3 million shares, rising to their highest price since the fall of 2008.