Financial figures scroll across a digital display at the TMX Group in Toronto’s financial district on May 9, 2014. (Photo: THE CANADIAN PRESS/Darren Calabrese)
A 90-day ceasefire in the U.S.-China trade war lifted stock markets on Monday, with U.S. stocks climbing sharply and Canada's market seeing solid, if more modest, gains.
The Toronto Stock Exchange (TSX) rose 174.44 points, closing at 25,532.18. Earlier in the day, it had surged more than 370 points above Friday’s finish. However, it couldn't quite match the energy of Wall Street.
“Toronto is lagging behind New York’s momentum because of the way our market is built,” explained John Zechner, chairman at J. Zechner Associates. “This is a day where investors are hungry for risk, but Toronto leans more on steady sectors.”
Meanwhile, American stocks saw an enthusiastic rally. The Dow Jones soared 1,160.72 points to 42,410.10. The S&P 500 rose 184.28 points to reach 5,844.19, and the tech-heavy Nasdaq leaped 779.43 points, or 4.4%, finishing at 18,708.34.
The spark? News broke over the weekend that the world’s two biggest economies had agreed to remove most tariffs against each other for the next 90 days. While many expected the talks to simply continue without major decisions, this concrete move caught investors off guard — in a good way.
“This was more than expected,” Zechner added. “It’s given the market real fuel to run with.”
The rally was especially strong for sectors previously hurt by tariffs. On Wall Street, tech giants, semiconductor firms, fashion brands, and travel-related companies saw major gains. In Canada, tech, energy, and base metal companies led the pack.
But while stocks were climbing, gold took a dive. Often seen as a safe investment when markets are shaky, gold lost its shine amid the renewed optimism. The June gold contract dropped by US$116, closing at US$3,228 an ounce.
This decline hit several Canadian gold mining companies hard. Shares of Lundin Gold Inc. tumbled 18%, Iamgold Corp. fell 10%, and Allied Gold Corp. dropped 9%.
In other commodities, copper prices slipped slightly, with the July contract down three cents to US$4.62 a pound. Oil, on the other hand, edged higher. The June crude oil contract gained 93 cents, ending at US$61.95 per barrel. Natural gas saw a dip, with June futures falling 15 cents to US$3.65 per mmBTU.
Despite the market cheer, some caution remains. Investors like Zechner are now watching closely for upcoming reports on inflation and job growth to see if the rally has staying power.
As for the Canadian dollar, it weakened slightly, closing at 71.44 cents U.S., down from 71.80 cents on Friday.
