TORONTO – Oil prices rose and two of Canada’s biggest banks posted solid results, pushing the Toronto stock market to a second straight triple-digit advance on Tuesday.
The S&P/TSX composite index closed up 166.23 points at 13,636.06 after a 101-point gain Monday, helped by a solid gain in the heavily weighted financials sector as both Scotiabank (TSX:BNS) and the Bank of Montreal (TSX:BMO) turned in fourth-quarter earnings that beat analyst expectations.
In New York, the Dow Jones industrial average rose 168.43 points to end the day at 17,888.35, while the S&P 500 added 22.22 points to 2,102.63 and the Nasdaq rose 47.64 points to 5,156.31.
U.S. banks were among the gainers in New York, amid signals the European Central Bank is looking to cut interest rates while the U.S. Federal Reserve looks to raise its rates later this month.
Higher interest rates are good for banks because they can charge more to lend money.
Ian Nakamoto, director of research at 3Macs, said stock prices usually rise in the last few weeks of the year.
“The Santa Claus rally is alive and well,” he said. “It’s a season where there tends to be more ups than downs, unless we get something (bad) out of the blue.”
After a tumultuous 2015, he said, investors believe markets will have a better year in 2016.
On commodity markets, the February gold contract fell $1.80 to end trading at US$1,063.50 an ounce, January benchmark crude oil rose 20 cents to settle at US$41.85 a barrel and January natural gas fell 0.4 of a cent to US$2.231 per mmBtu.
The Canadian dollar ended the day down 0.06 of a U.S. cent at 74.83 cents U.S.
Before the market opened, Statistics Canada said the country’s real gross domestic product grew at an annualized rate of 2.3 per cent in the third quarter after contracting in the first half of 2015.
Despite the rebound for the quarter as a whole, the economy actually shrank by 0.5 per cent at a non-annualized rate in September.
Nakamoto said that the Canadian economy is still suffering from the overhang of the commodity shock. Oil prices have fallen by more than half over the last 16 months.
“We relied on growth in the oil sector for five years, 10 years and now that that’s gone. I’m hard pressed to find where the next avenue of growth for the Canadian economy is going to come from,” he said.
The trading day began with some good news from Japan, where an index measuring factory output in the world’s third-largest economy rose to 52.6 in November, the highest reading in 20 months and up from 52.4 in October. Japanese shares jumped 1.3 per cent on the news.
— With files from The Associated Press