North American markets start week higher following Chinese rebound

TORONTO – North American stock markets began the holiday-shortened trading week in an upbeat mood Tuesday as a rebound on China’s main index appeared to cheer investors, although experts warn the recovery is likely to be short-lived.

The S&P/TSX index in Toronto was up 152.36 points at 13,630.67, with the metals and mining sector by far the biggest gainer — climbing nearly nine per cent — amid a huge jump in copper prices. China is a major purchaser of copper, which is used in many industrial processes.

The only sector of the Toronto stock market that didn’t register gains was health- care, which declined by less than three per cent.

The Canadian dollar rose 0.34 of a U.S. cent to 75.73 cents US.

In New York, markets jumped even more after last week’s big losses, with the Dow Jones industrial average rebounding 390.30 points to 16,492.68 while the broader S&P 500 index advanced 48.19 points to 1,969.41 and the Nasdaq gained 128.01 points to 4,811.93.

But despite the rebound, Ben Jang, a portfolio manager at Nicola Wealth Management, says investors should expect a bumpy ride.

“I think we’re going to get persistent volatility, both on the downside and the upside, for the next few month,” said Jang. “So although we’re seeing a nice recovery today, there is nothing really suggesting that we are on the path for a sustained recovery.”

Jang says investors are skittish ahead of the Sept. 16-17 meeting of the U.S. Federal Reserve.

“People are concerned about (interest rate) liftoff,” said Jang, noting that the lack of strong commentary indicating what the Fed will do has led to increased volatility.

“Historically the Fed has been extremely vocal telegraphing their actions,” said Jang.

On commodity markets, the December copper contract shot up 12 cents to US$2.43 a pound while the December gold contract slipped 40 cents to US$1,121 an ounce.

October crude oil was down 11 cents at US$45.94 a barrel and October natural gas rose 5.5 cents to US$2.71 per thousand cubic feet.

China’s main market, the Shanghai composite index, fought back from earlier losses to close up 2.9 per cent despite a report showing Chinese exports shrank 5.5 per cent in August compared with the same month a year earlier, while imports fell 13.8 per cent.

Regulators in China also announced plans to introduce a “circuit breaker” mechanism that would halt trading on the country’s stock exchanges for half an hour if indexes rise or fall by five per cent. The aim is to prevent investors from dumping stocks in a panic during periods of heightened volatility.

Elsewhere in Asia, Japan’s Nikkei 225 stock index sank 2.4 per cent, while Hong Kong’s Hang Seng rose 3.3 per cent.

In Europe, Germany’s DAX advanced 1.6 per cent, France’s CAC 40 rose 1.1 per cent and Britain’s FTSE 100 was 1.2 per cent higher.