TSX outperforms global markets
Investors make beeline to safe havens such as gold and equities
While some markets stumbled on Wednesday, rising metal prices helped Canada’s benchmark stock index to its second strong finish this week.
The S&P/TSX composite rose 77.90 points, or 0.62 per cent, to close at 12,701.26. Seven of the 10 sub-indexes advanced, led by materials, up 1.90 per cent, and telecommunications, which rose 1.38 per cent.
“Canada again rose to the top of the class and outperformed almost all other major global equity markets [on Wednesday],” said Scotia Capital economists Derek Holt and Dov Zigler. They pointed to a number of factors that could have been behind the weakness on global-equity markets, including disappointing economic data out of China and Europe; sabre-rattling by Russia’s Foreign Minister over Iran, and the departure of UN nuclear inspectors from that country, which led to speculation that a confrontation is building and sent investors to safe havens, including gold.
“A third factor is persistent concern that the latest Greek aid package has solved nothing in the face of Greece’s deep structural challenges. Fourth, there may be an element of consolidation sweeping through markets following a strong rally in global equities since last fall that has run ahead of other asset classes.”
A report showing existing home sales in the U.S. rose less than expected in January also weighed on sentiment, particularly in the U.S., where the Dow Jones industrial average fell 27.02 points, or 0.21 per cent, to 12,938.67, and the Nasdaq composite slipped 15.40 points, or 0.52 per cent, to 2,933.17.
Canada’s junior Venture exchange rose 6.32 points, or 0.38 per cent, to 1,684.95.
Gold producers benefited from the rise in the price of the precious metal, including Barrick Gold, which saw its share price rise 2.55 per cent, to $49.48. Goldcorp shares rose 2.28 per cent to $49.26, and Eldorado Gold went up 3.21 per cent to $14.80.
The Canadian dollar had its first below-par close since the first of the month, falling 38 basis points to 99.96 cents US.