Markets in the U.S. and Canada posted gains for the second day in a row after a roller-coaster last week triggered by several failing or floundering banks, with the S&P/TSX composite led Tuesday by strength in energy and financial stocks.
The S&P/TSX composite index was up 135.49 points at 19,654.92.
In New York, the Dow Jones industrial average was up 316.02 points at 32,560.60. The S&P 500 index was up 51.30 points, at 4,002.87, while the Nasdaq composite was up 184.57 points, or 1.6 per cent, at 11,860.11.
Markets posted broad-based gains Tuesday, which is a good sign that appetite for risk is back up after last week’s volatility, said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
The market has handled a range of bad news relatively well, said Archibald, and it seems investors believe the worst of the crisis in confidence is behind them, with comments by Treasury Secretary Janet about the situation “stabilizing” helping to boost morale.
Another positive sign was the rally in the U.S. financial sector, especially among regional banks, said Archibald.
“Everybody has a problem when financials have a problem,” he said.
The big news of the week will be Wednesday’s rate announcement by the Federal Reserve, said Archibald. Market expectations for what the announcement will hold have shifted since the events of last week, with most eyeing a quarter-percentage-point hike and more dovish messaging than previous announcements as the central bank tries to balance fighting inflation with worries about the financial system.
Markets are still pricing in rate cuts in the latter half of 2023 but Archibald thinks comments by the Fed Wednesday may quell those hopes.
Meanwhile, new inflation data in Canada for February showed price growth continuing to slow, and with oil prices dropping in March likely to lead to even slower growth for the next release, signs are pointing toward the Bank of Canada continuing its pause on rates, said Archibald.
The risk-on appetite of investors Tuesday resulted in selling-off among more defensive investments, said Archibald, with gold, utilities and telecom softer amid the market’s rise.
The Canadian dollar traded for 72.96 cents US compared with 73.13 cents US on Monday.
The May crude contract was US$1.85 cents at US$69.67 per barrel and the April natural gas contract was up 13 cents at US$2.35 per mmBTU.
The April gold contract was down US$41.70 at US$1,941.10 an ounceand the May copper contract was up four cents at US$3.99 a pound.
© 2023 The Canadian Press
