TORONTO – Canada’s main stock index moved lower Friday, weighed down by base metals and energy stocks as the price of oil fell, while U.S. markets cruised to close Wall St.‘s best week this year on a wave of post-election bets.
President-elect Donald Trump is perceived as being market-friendly and pro-business, said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.
That’s why the biggest beneficiaries of this week’s rally have been sectors or specific companies seen as benefiting from Trump’s promised policies, he said.
“It’s financials, it’s energy, it’s Tesla, and all of those are just continuing to run as people wrap their heads around four more years of Trump.”
In New York, all three major indexes reached new heights. The Dow Jones industrial average was up 259.65 points at 43,988.99. The S&P 500 index was up 22.44 points at 5,995.54, while the Nasdaq composite was up 17.32 points at 19,286.78.
The S&P/TSX composite index closed down 86.53 points at 24,759.40.
While the short-term effect of Trump’s election on the markets is clearly positive, Burkett said it’s less clear what his effect will be over the medium term. Some of his promised policies, chief among them large tariff hikes that particularly target China, will likely be inflationary, he said.
That will make the U.S. Federal Reserve’s job harder, he said. The central bank has been cutting its key rate after successfully tamping down inflation — cutting again on Thursday — but a resurgence in inflation could change its trajectory.
In Canada, where the economy is weaker and the central bank’s cutting trajectory steeper, things could also get more complicated, said Burkett.
“Our economy really is so tied to the U.S. economy,” he said.
If the loonie weakens against the U.S. dollar due to Trump’s policies, that will in turn be inflationary for Canada, said Burkett.
“I think you’re going to start to see volatility coming into markets. You’re going to see uncertainty around rate trajectory. And I think that could be a really interesting 2025,” he said.
Canada’s unemployment rate held at 6.5 per cent in October, largely supporting the Bank of Canada’s current rate trajectory. The central bank’s key rate is now at 3.75 per cent, down from five per cent in June.
The Canadian dollar traded for 71.88 cents US compared with 72.12 cents US on Thursday.
The December crude oil contract was down US$1.98 at US$70.38 per barrel and the December natural gas contract was down two cents at US$2.67 per mmBTU.
The December gold contract was down US$11.00 at US$2,694.80 an ounce and the December copper contract was down 12 cents at US$4.31 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Nov. 8, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
