A TSX tote board is pictured in Toronto, on Dec. 31, 2012. THE CANADIAN PRESS/Frank Gunn

North American stock markets rally as U.S. stimulus hopes push materials higher

North American stock markets rally as U.S. stimulus hopes push materials higher

TORONTO — North American stock markets enjoyed a broad-based rally Tuesday as improving U.S. stimulus hopes helped to increase gold prices and the materials sector.

“Fiscal negotiations in the U.S. are once again front and centre with renewed hopes for a spending bill before the end of the year rejuvenating risk appetite here today,” said Candice Bangsund, portfolio manager for Fiera Capital.

A US$908-billion package is being divided in two, with US$748 billion worth of measures that have bipartisan support likely being passed this week.

“Investors are increasingly optimistic that a near-term aid package will get passed, which a few weeks ago seemed that it wasn’t even in the realm of possibility. So this is obviously helping to boost stock markets globally,” Bangsund said in an interview.

The optimism is also supported by the start of COVID-19 vaccinations in the U.S. that is helping to offset fears about rising infections and deaths that heighten the threat of new lockdowns.

Not only have vaccinations begun, but the Food and Drug Administration said Tuesday that data on Moderna’s coronavirus vaccine met expectations for emergency use. FDA approval would add a second vaccine option after one from Pfizer was previously approved. Several other possibilities remain.

News on vaccines is “bolstering that call for a rapid return to normalcy next year,” said Bangsund.

The S&P/TSX composite index closed up 119.08 points at 17,506.48.

In New York, the Dow Jones industrial average was up 337.76 points at 30,199.31. The S&P 500 index was up 47.13 points at 3,694.62, while the Nasdaq composite was up 155.02 points at 12,595.06.

Nine of 11 major sectors on the TSX were higher, led by health care, materials, consumer discretionary and real estate.

Health care was helped by a 5.8 per cent gain by Aurora Cannabis Inc., while a 6.3-per-cent lift from BRP Inc. helped the consumer sector.

The metal and mining sector rose 2.1 per cent with Silvercorp Metals Inc. up 8.4 per cent and First Majestic Silver Corp up 7.5 per cent on higher metals prices.

The February gold contract was up US$23.20 at US$1,855.30 an ounce and the March copper contract was up 1.8 cents at US$3.54 a pound.

Gold gained on the prospect of additional fiscal stimulus that is viewed as inflationary.

The stimulus package is also helping the outlook for global demand that’s driving oil and copper prices higher along with commodities and other sectors linked to the fortunes of the global economy, she said.

That’s helping cyclical, economically sensitive sectors that are tied to reopenings such as energy, financials, industrials and materials that were up on Tuesday.

Energy gained nearly one percentage point as higher crude oil prices lifted shares of Seven Generations Energy Ltd. three per cent and Canadian Natural Resources Ltd. 2.4 per cent.

The January crude oil contract was up 63 cents at US$47.62 per barrel and the January natural gas contract was unchanged at US$2.68 per mmBTU.

The Canadian dollar traded for 78.60 cents US compared with 78.39 cents US on Monday.

Driving the loonie’s appreciation was a jump in crude prices, a weaker U.S. dollar and strong-than-expect Canadian housing starts.

This report by The Canadian Press was first published Dec. 15, 2020.

Companies in this story: (TSX:SVM, TSX:FR, TSX:VII, TSX:CNQ, TSX:ACB, TSX:DOO, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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