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Market Update

November 18, 2017

The close: TSX gains as gold, energy prices rise

The Toronto Stock Exchange rose Friday led higher by rising gold and energy prices.

The S&P/TSX composite index rose 63.20 points, or 0.40 per cent to 15,998.57.

Gains for the index came as data showing a drop in Canada's annual inflation rate gave the Bank of Canada room to wait until next year to raise interest rates again.

Before this week, the TSX had advanced for nine consecutive weeks, a feat not seen since late 1996.

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The materials group, which includes precious and base metals miners and fertilizer companies, added 1 per cent. Lundin Mining gained 3.5 per cent, Teck Resources was up 3.4 per cent and Barrick Gold was up 1.1 per cent.

Gold jumped to a one-month high on Friday as the dollar softened on uncertainty about the progress of a proposed overhaul of the U.S. tax code that would be the biggest since the 1980s.

Spot gold was up 1.2 per cent at $1,293.53 (U.S.) an ounce on track for the biggest one-day jump since Aug. 28. It rose to the highest price since Oct. 16 at $1,297. For the week, it was poised to finish up 1.3 per cent, its strongest weekly performance since mid-October.

Energy group gained 0.5 per cent. Encana Corp. jumped 1.3 per cent, while Seven Generations Energy Ltd. was up 1.9 per cent.

Oil rose more than 2 per cent on Friday as a major U.S. crude pipeline was shut and traders anticipated an OPEC deal to extend curbs on production, but prices remained on track for a weekly loss after five sessions of declines.

Brent crude oil was up $1.49 at $62.85 (U.S.) a barrel while U.S. West Texas Intermediate crude (WTI) rose $1.37 to $56.51 (U.S.) a barrel.

Financial shares, which account for 35 per cent of the index's weight, firmed 0.4 per cent.

Wall Street ended the week on a sour note on Friday, with major indexes falling modestly as investors weighed the fate of the Republicans' tax overhaul plan.

The Dow Jones Industrial Average fell 100.15 points, or 0.43 per cent, to 23,358.21, the S&P 500 lost 6.84 points, or 0.26 per cent, to 2,578.8 and the Nasdaq Composite dropped 10.50 points, or 0.15 per cent, to 6,782.79.

Investors have been hopeful that a tax bill under debate in Congress will boost corporate earnings and further fuel the stock market's record-setting run.

Congressional Republicans took important steps on Thursday toward the biggest U.S. tax-code overhaul since the 1980s, with the House of Representatives approving a broad package of tax cuts. The debate shifts to the Senate, where a bill has already encountered resistance within the Republican ranks.

A Reuters poll showed that nearly two-thirds of more than 60 economists said they were not confident the Trump administration would get the legislation passed this year.

"Everybody is looking at that tax plan and wondering exactly what are the devils in the details," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

The benchmark S&P 500 has rallied more than 15 per cent this year, supported by corporate earnings growth and solid economic data.

With nearly all of the S&P 500 companies reporting results, third-quarter earnings are expected to have climbed 8.2 per cent, according to Thomson Reuters I/B/E/S.

Abercrombie & Fitch jumped 23.9 per cent and Gap rose 7 per cent after the apparel retailers reported results that beat estimates.

Shares of sports retailers soared on better-than-expected earnings. Foot Locker jumped 28.2 per cent, Shoe Carnival surged 30 per cent and Hibbett Sports gained 15.2 per cent.

Twenty-First Century Fox shares rose 6.6 per cent after two people familiar with the situation said both Comcast and Verizon were interested in buying parts of its studio and TV operations.


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