Toronto Star

TSX gains continue as year-end nears


The Toronto stock market registered a solid advance Monday, building on gains racked up last week in the wake of stronger-than-expected economic growth numbers from Canada and the United States.

However, the S&P/TSX composite index was off session highs as energy stocks and oil prices lost early momentum. The main Toronto index was down from a 122-point gain to close up 54.67 points at 14,663.92. The Canadian dollar dipped 0.05 of a cent (U.S.) to 85.99 cents. New York markets were mixed, with the Dow Jones industrial­s down 15.48 points at 18,038.23, while the Nasdaq inched up 0.05 of a point to 4,806.91 and the S&P 500 index added 1.8 points to 2,090.57.

The TSX is on the way to a gain of around 8 per cent for 2014, with the market getting a lift of 1 per cent last week after data showed Canada’s gross domestic product rose by 0.3 per cent in October, beating economists’ expectatio­ns of 0.1-per-cent growth for the month.

And in the U.S., GDP growth figures for the third quarter were revised upward to 5 per cent from a previous figure of 3.9 per cent.

The American data is a big plus for Canada as a surging U.S. economy benefits Canadian exports and, in turn, provides lift to the TSX.

An advance of about 8 per cent on the TSX would be down sharply from a 15-per-cent surge at mid-year. But that was before oil prices started to slide. They now are down 50 per cent from summer highs amid a huge increase in global supply and lower demand from economic weak spots such as China and Europe.

Energy stocks have been heavily punished, along with Toronto’s energy group, down about16 per cent year to date, while traders wonder how low crude oil prices can go. Prices plunged to levels in the mid-$30s after the 2008 financial collapse. But Brian Belski, chief investment strategist at BMO Capital Markets, notes that those prices occurred during a global recession and such a drop now would be too drastic.

“There’s going to be a lot of volatility in the world going forward,” he said. “So I think you need a period of digestion.

“You need to start seeing more humble forecasts and again, going back to good old-fashioned investing. When we get to a point where energy companies aren’t over-promising and under-delivering, that’s when they will be attractive again.”

The TSX energy sector slipped 0.3 per cent as February crude in New York erased early gains to slide $1.12 to $53.61 a barrel.

However, most other sectors advanced with the base metals group ahead 0.55 per cent as March copper rose one cent to $2.82 a pound.

The gold sector was also up 0.4 per cent even as February bullion dropped $13.80 to $1,181.50 an ounce.

Outside the resource sectors, financials and industrial­s climbed 0.55 per cent.

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