Consumer sentiment data could spark stock markets

TORONTO — The Toronto stock market looks ready to close out 2009 at or even slightly above its highs for the year after economic data last week strengthened expectations that the U.S. economic recovery is on track.

TORONTO — The Toronto stock market looks ready to close out 2009 at or even slightly above its highs for the year after economic data last week strengthened expectations that the U.S. economic recovery is on track.

And investors hope key consumer data out on Tuesday will provide more indications of a rebound.

It will be a shortened trading week with the TSX open for business for just three days.

New York returns to work Monday following Christmas, while Canadian markets reopen Tuesday. Both are closed Friday for New Year’s Day.

The Toronto market ran up a solid 291 points or 2.54 per cent last week, leaving Canada’s main stock index up 31 per cent for the year to date.

Markets were lifted by U.S. home resale activity for the month of November that came in better than expected.

And investors were also relieved by other data showing a smart move up in American durable goods orders while claims for unemployment insurance continued to head lower.

“At least for the early part of 2010, I think it takes off the radar screen any concern that there’s going to be a hiccup or surprise,” said Andrew Pyle, investment adviser with ScotiaMcLeod in Peterborough, Ont.

“It would be really incredible I think to see a negative shock on the economic front in the first few months in the year based on some of the numbers that we’ve seen going into the end of the year.”

However, Pyle thinks there is a potential for shock later in 2010 as interest rates nudge higher and governments try to wean their economies off massive amounts of stimulus cash.

At the same time, investors will be looking for further evidence that the U.S. consumer is on board for the recovery when the U.S. Conference Board releases its latest figures on consumer confidence.

“It will take into account everything that has happened this month from obviously the equity market improvement to the improvement in jobs,” said Pyle.

“So if these numbers are real, if we’re getting a real accurate picture of what’s happened on the jobs front, then this confidence number has the potential to be very, very positive.”

He notes that economists expect an increase of about four points in the index to around 53.

And if the number beats that expectation, Pyle thinks the markets would be poised for a rally.

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