The Toronto stock market was higher Tuesday as traders hoped for a quick end to the U.S. government’s partial shutdown which began at midnight due to a political impasse in Washington.
The S&P/TSX composite index rose 55.55 points to 12,842.74, held back by mining stocks which fell alongside prices for oil and metals.
Falling commodity prices helped push the Canadian dollar down 0.23 of a cent to 96.83 cents US, even as the American dollar weakened against other currencies.
Strong manufacturing data helped send U.S. indexes higher even though a sharply divided Congress failed to approve a short-term funding agreement before midnight.
The Dow Jones industrials ticked 63.7 points higher to 15,193.37, the Nasdaq climbed 32.42 points to 3,803.9 and the S&P 500 index gained 11.63 points to 1,693.18.
The Institute for Supply Management’s September index showed rising expansion, coming in at 56.2 on top of a 55.7 reading in August. Economists had expected the index to ease slightly to 55.
The clock is also ticking towards an even more worrisome prospect, an Oct. 17 deadline when the U.S. government hits its debt limit and begins to run out of cash to pay its bills.
“I think the real volatility, uncertainty and excitement is coming up with the debt ceiling,” said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
“What concerns me is I don’t believe the politicians truly understand the impact that could be felt by the economy and the markets if they don’t reach a resolution. It seems the only thing they’re concerned about is their agenda.”
Some critical parts of the government, from the military to air traffic controllers, will remain open, and analysts said significant damage to the country’s economy was unlikely unless the shutdown lasted more than a few days.
But the shutdown is being felt in creating an absence of what is usually market-moving data.
On Tuesday, traders were also supposed to also take in the latest reading on construction spending but the data was held up because of the shutdown.
Also, traders had been looking to Friday and the release of the government’s September employment report. That has also been put on hold with the U.S. Labor Department saying it won’t collect data or issue reports during the shutdown.
The industrial sector gained one per cent with Canadian National Railway (TSX:CNR) ahead $1.54 to $105.91.
The energy sector was also ahead one per cent while oil prices were lower for a third day amid worries about the effect of the shutdown on the U.S. economy and weak Chinese manufacturing data. The November crude contract on the New York Mercantile Exchange dropped 96 cents to US$101.37. Canadian Natural Resources (TSX:CNQ) improved by 51 cents to $32.88.
Financials were also supportive with Manulife Financial (TSX:MFC) up 22 cents to $17.26.
Miners were the biggest TSX weight with the gold sector down 3.1 per cent as prices for the traditional safe haven fell back. The December contract fell $39 to $1,288 an ounce and the component fell 2.3 per cent. Barrick Gold Corp. (TSX:ABX) dropped 73 cents to $18.45.
The base metals sector was down two per cent while metal prices were also lower with December copper down six cents at US$3.26 a pound. First Quantum Minerals (TSX:FM) shed 72 cents to $18.46.
In corporate news, shares in automaker Ford rose 2.25 per cent to $17.25 in New York as its U.S. sales rose six per cent in September, with strong car sales making up for slower sales of SUVs.
European bourses were mixed as data showed that unemployment across the eurozone held steady in August, in another sign that the eurozone economy is stabilizing following its longest-ever recession.
Eurostat, the EU’s statistics office, said the unemployment rate was 12 per cent in August, unchanged from the previous month and down modestly from the 12.1 per cent peak recorded in the summer.
London’s FTSE 100 index down 0.06 per cent, Frankfurt’s DAX gained 1.03 per cent while the Paris CAC 40 was ahead 1.1 per cent.