Flight to safety pushes gold higher, lifts TSX

TORONTO — Canada’s main stock index climbed to within a few points of a record close Tuesday as the materials sectors was helped by higher gold prices amid a continued flight to safety by investors.

The S&P/TSX composite index was up 62.59 points at 17,168.06, just 12 points short of the record Christmas Eve close.

The increase came after Canada’s trade deficit shrank because of lower imports and exports that could put some downward pressure on future GDP growth, says Craig Jerusalim, portfolio manager at CIBC Asset Management.

“The markets are giving this data point a little bit of a pass today and are continuing to shrug off global macro risks in edging higher,” he said in an interview.

Lower activity was partly blamed on a strike at CN Rail, but shares of the Montreal-based railway and rival CP Rail were both higher on the day.

Nine of the 11 major sectors on the TSX were up with materials gaining 1.4 per cent as Turquoise Hill Resources Ltd. and Eldorado Gold gained seven and 4.7 per cent, respectively.

“Investors are continuing to move to that flight to safety trade somewhat and like the diversification and balance that gold investments bring today,” Jerusalim said. He added traders are anticipating that gold prices could move higher as Iran threatened revenge against the U.S. over the drone killing of a top commander.

The February gold contract was up $5.50 at $1,574.30 an ounce, the highest level in nearly seven years. The March copper contract was up 0.35 of a cent at $2.79 a pound.

Energy and health care were the only losing sectors as crude oil prices fell after Monday’s rally while cannabis companies were lower with shares of Hexo Corp. losing 5.8 per cent.

The February crude contract was down 57 cents at $62.70 per barrel and the February natural gas contract was up 2.7 cents at $2.16 per mmBTU.

The Canadian dollar traded for 76.87 US compared with an average of 77.10 cents US on Monday.

In New York, the Dow Jones industrial average was down 119.70 points at 28,583.68. The S&P 500 index was down 9.10 points at 3,237.18, while the Nasdaq composite was down 2.88 points at 9,068.58.

The decreases came despite the U.S. trade deficit shrinking to a three-year low and the Institute for Supply Management said its non-manufacturing index exceeded expectations by rising in December.

“All of these data points combined with strong labour statistics suggests that U.S. growth continues to be on pace for a level that’s close to full potential so you could see slightly higher GDP than some people were expecting,” Jerusalim said.

U.S. markets decreased as investors, far from panicking, were catching their breath as they wait for Iranian reaction, he added.

Jerusalim said the threat of oil supply disruptions due to geopolitical tensions in the Middle East are less of a threat than they were during the last Gulf wars because the United States has become the world’s largest oil producer and is self-sufficient when including Canadian imports.

While disruptions to a pipeline or refinery would cause commodity prices to rise, that would also allow premium producers to ramp up production and offset some of those higher prices.

“Relative to what we saw during the Iraq wars in the past and other flare-ups, investors aren’t as concerned as major disruptions as they have been in the past.”

• Montreal technology firm Lightspeed has reached a deal to buy German point-ofsale company Gastrofix for $164 million.

The deal for the cloud-based, hospitalityfocused company includes $79.4 million in cash and $52.7 million in shares.