North American markets trade higher

Brightened prospects of a breakthrough in the trade war between the world’s two largest economies propelled U.S. stock markets to new record highs and pushed Canada’s main index higher Thursday.

“Many were hoping for a trade detente and some of the headlines are suggesting it’ll be a detente and even a little bit of a removal of some of the headwinds,” said Michael Greenberg, portfolio manager at Franklin Templeton MultiAsset Solutions.

China and the United States agreed to reduce punitive tariffs on each other’s goods as part of a phase one agreement.

“So that’s maybe a little bit better than people expected.”

An agreement isn’t surprising given that U.S. President Donald Trump would likely want to avoid a “barn brawl” that could wreak havoc with the economy heading into next year’s presidential election, said Greenberg.

“So he’s motivated to kick the can down the road,” he said, referring to delicate topics not included in the preliminary agreement.

Trade uncertainty has hurt the economy so the potential removal of that has pushed stock markets higher.

The S&P/TSX composite index closed up 60.11 points at 16,805.75, just 142 points away from the 16,947.23 record high set in September.

In New York, the three U.S. markets hit intraday records before the Dow Jones industrial average closed up 182.24 points at 27,674.80, a record close. The S&P 500 index was up 8.40 points at 3,085.18, also a record close. The Nasdaq composite was up 23.89 points at 8,434.52.

The Canadian dollar traded for 75.90 cents US compared with an average of 75.88 cents US on Wednesday.

The TSX was driven higher by a 4.2 per cent gain by the energy sector.