Markets surge on goP’s debt ProPosal
TORON TO • A sign that an agreement may be in the works to head off a possible default by the U.S. government was enough to push North American markets sharply higher Thursday.
The S&P/TSX composite index ran up 164.08 points to 12,894.41 after House speaker John Boehner said Republicans are offering legislation that will allow for a temporary increase in the debt ceiling.
New York indexes had their second-best day this year as the Dow Jones industrial average surged 323.09 points to 15,126.07, Nasdaq shot up 82.97 points to 3,760.75 and the S&P 500 index rose 36.16 points to 1,692.56.
Mr. Boehner said the proposal involves extending the government’s ability to borrow money through Nov. 22 — but only if President Barack Obama agrees to negotiate over ending the partial government shutdown and a longer-term increase in the debt ceiling. Under the Republican plan, the partial government shutdown would continue. But that is a secondary issue for traders and Mr. Boehner said that issue would be discussed at a White House meeting later Thursday after markets close.
The Canadian dollar slipped US0.02¢ to US96.19¢.
The strong gains followed a string of declines that reflected a growing sense of unease as the U.S. heads toward an Oct. 17 deadline when the government starts to run out of money to pay creditors.
“They [investors] don’t really care whether it’s a structural fix or a long-term fix or another push off the fiscal cliff, if it’s any type of positive tone in terms of willingness to negotiate in good faith,” said Kevin Headland, director, portfolio advisory group at Manulife Asset Management.
Markets have been under pressure since Oct. 1 when a budget impasse resulted in a partial shutdown of the U.S. government.
Republicans have been demanding changes to Mr. Obama’s signature healthcare legislation and spending cuts in return for a funding measure that would reopen the government and increase the debt limit.
Prices for oil and copper advanced on word of the possible Washington gridlock fix.
The energy sector led advancers, up almost 2% as the November crude contract on the New York Mercantile Exchange moved up US$1.40 to US$103.01 a barrel. Cenovus Energy Inc. advanced 77¢ to $30.88.
Canadian Natural Resources Ltd. climbed $1.43 to $33.46 after the oil and gas giant provided a sneak preview at its third-quarter results.
Canadian Natural Resources Ltd. said its cash flow from operations during the quarter came in at about $2.21 per share, better than the $1.94 analysts polled by Thomson Reuters had on average expecting. The company reports earnings Nov. 7.
The base metal sector was up 1.63% with December copper up US2¢ at US$3.25 a pound. First Quantum Minerals Ltd. climbed 48¢ to $18.60 while Thompson Creek Metals Co. climbed 19¢ to $3.41.
Financials gained 1.55% as Royal Bank of Canada rose $1.29 to $67.69. And the gold sector fell 0.7% as December bullion dropped US$10.30 to US$1,296.90 an ounce.