After lagging U.S. stocks for most of the year, Canada’s S&P/TSX composite index is starting to look strong next to the Dow Jones industrial average and the S&P 500 – well, after comparing returns in Canadian-dollar terms.
The TSX enjoyed a big bounce on Tuesday and is on track for another outsized gain on Wednesday, bringing the two-day total to about 250 points. Meanwhile, major U.S. indexes have flat-lined over the past two days. Add it up, and the TSX is up 6.2 per cent this year – nearly 2 percentage points ahead of the Dow (in Canadian-dollar terms) and just a tenth of a percentage point behind the S&P 500.
You can thank materials stocks for the gains. These stocks, which include gold producers and have a big weighting within the S&P/TSX composite index, have risen 11.4 per cent in 2012 – leading other subindexes by a big margin.
To be sure, the S&P 500 is ahead in U.S. dollar terms, but the rising Canadian dollar has brought them down. The loonie has been trading above par next to the U.S. dollar throughout most of February, up about 2 cents from the start of the year.
