Markets surge as GOP talks deal
Proposal of temporary increase in debt ceiling raises hopes
TORONTO — 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 so far this year as the Dow Jones industrials surged 323.09 points to 15,126.07, the Nasdaq shot up 82.97 points to 3,760.75 and the S&P 500 index rose 36.16 points to 1,692.56.
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 Boehner said that issue would be discussed at a White House meeting later Thursday after the markets close.
The Canadian dollar slipped 0.02 of a cent to 96.19 cents US.
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.
Markets have been under pressure since Oct. 1 when a budget impasse resulted in a partial shutdown of the U.S. government.
Prices for oil and copper advanced on word of the possible Washington gridlock fix.
The energy sector led advancers, up almost two per cent as the November crude contract on the New York Mercantile Exchange moved up $1.40 to $103.01 US a barrel. Cenovus advanced 77 cents to $30.88 Cdn.
Meanwhile, the gold sector fell 0.7 per cent as December bullion dropped $10.30 to $1,296.90 US an ounce. Goldcorp faded 39 cents to $25.25 Cdn.