Global stocks and commodities prices received a lift on Monday from better-than-expected Chinese economic data and news that Europe had bought itself more time to defuse its debt and banking crisis, with a 100-billion euro bailout of Spanish banks.
In Toronto, the S&P/TSX gained 42.64 points to 11543.27 points, with the energy and materials sectors leading the charge. Utilities registered a small decline as investors moved to acquire greater risk.
In New York, the S&P 500 added 4 points to 1329.66 points and the Dow Jones industrial average rose 47.79 points to 12601.99 points.
Copper prices climbed almost 7 cents, or 2 per cent, to $3.35 (U.S.) a pound. The price of oil rose $1.09 a barrel to $85.19. Gold increased by $3.20 an ounce, to $1,594.60. With commodities on the rise, the Canadian dollar found some momentum, rising 0.2 per cent to 97.58 cents.
It’s questionable, however, how long investor enthusiasm will last, as attention moves from Spain’s banking crisis to Italy’s financial problems. Yields on government debt rose across most of Europe on Monday, with the cost of Italian debt (10-year bonds) rising 19 basis points, to 5.935 per cent. The yield on Spain’s 10-year government notes increased by 21 basis points to 6.379 per cent.
In China, the government reported that exports increased last month at more than double the pace economists had estimated. However, industrial output and retail sales fell short of expectations.
“The key issue for global stock markets is whether the global economy can grow if Europe’s recession worsens. More specifically, the question is whether the economies of the US and China can grow if Europe is in a recession,” Ed Yardeni, president and chief investment strategist at U.S.-based Yardeni Research Inc., wrote in a morning note.