TSX climbs ‘wall of worry’ to gain 6.2% in November

5:12 pm Friday, November 29th, 2024

By Fergal Smith

(Reuters) -Canada’s main stock index extended its November gains on Friday, moving to a new record high, with technology and industrial shares rising as investors welcomed greater clarity about the economic outlook following the outcome of the U.S. election.

The S&P/TSX composite index ended up 104.48 points, or 0.4%, at 25,648.00, eclipsing the record closing high it posted on Thursday. For the month, it was up 6.2%, its fifth straight monthly gain and the largest since November last year.

“We’ve climbed that wall of worry,” said Greg Taylor, portfolio manager at Purpose Investments.

“There was a lot of nervousness heading into the (U.S.) election and now we’ve got at least more clarity with what’s going on. We’ve got more confidence that there’s going to be some more growth aspects in the U.S. and that should help earnings as the economy keeps going and regulation falls back.”

U.S. President-elect Donald Trump has pledged to cut taxes and loosen business regulations.

While those measures could boost the economy, the potential for higher fiscal deficits under the Trump administration, as well as inflationary tariff and immigration policies, could reduce prospects for Federal Reserve interest rate cuts and raise long-term borrowing costs, say analysts.

“The big thing everyone is going to be watching is just what happens with (bond) yields and the (U.S.) dollar going forward, because if yields and the dollar keep going higher that’s going to be a pretty big headwind,” Taylor said.

The Canadian dollar posted its third straight monthly decline against its U.S. counterpart in November as Canada’s economy grew just 1% in the third quarter, prompting investors to raise bets on another outsized interest rate cut from the Bank of Canada.

The technology sector added 1% on Friday and industrials were up 0.5%. Seven of 10 major sectors ended higher.

(Reporting by Nikhil Sharma in Bengaluru; Editing by Shreya Biswas and Deepa Babington)