North American markets positive on fiscal cliff talks
David Friend, The Canadian Press
Published Tuesday, December 18, 2012 5:29PM EST
TORONTO -- North American stock markets kept positive Tuesday buoyed by hopes that U.S. political leaders are moving closer to a deal that would steer clear of the "fiscal cliff."
The S&P/TSX composite index rose 52.99 points to 12,334.34, while the TSX Venture Exchange ticked back 8.99 points to 1,176.00.
The Canadian dollar was down 0.21 of a cent to 101.45 cents US.
House Speaker John Boehner said Tuesday he remains hopeful that a fiscal cliff compromise can be reached, but added President Barack Obama has yet to offer a balanced deficit-cutting plan. Boehner said that Obama's latest offer for $1.3 trillion in tax increases over the next decade with $850 billion in spending cuts is not balanced enough.
But Boehner's plan also faces opposition from other quarters. Senate Majority Leader Harry Reid says the Boehner plan can't pass the Democratic-run Senate.
If congressional Republicans, Democrats and the White House can't reach a deal by Jan. 1, tax cuts enacted a decade ago for all Americans will expire and government programs will be cut across the board. The combination could lead to a U.S. recession that could spread to other economies of the world.
But traders still seem confident a deal can be etched out.
On Wall Street, the Dow Jones industrials gained 115.57 points to 13,350.96, logging the first back-to-back triple digit gains since July. The Nasdaq rose 43.93 points to 3,054.53 while the S&P 500 index was up 16.43 points at 1,446.79.
Meanwhile, the U.S. current account trade deficit narrowed in the July-September quarter to the smallest level since late 2010, but the improvement may not last.
The U.S. Commerce Department said the deficit fell to $107.5 billion in the third quarter, down nine per cent from the second quarter imbalance of $118.1 billion. It was the lowest trade gap since the final three months of 2010.
And Standard & Poor's rating agency has boosted the credit grade of Greece by six notches to B-, which moves the country out of default status. After concerns earlier this year that Greece would leave the euro, S&P said that it's confident the other 16 countries using the currency will ensure that Greece stays within the union.
In commodities, oil prices trekked higher as the January crude contract on the New York Mercantile Exchange rose 73 cents to US$87.93 a barrel. The TSX energy sector led the market, gaining 0.7 per cent with EnCana Corp. (TSX:ECA) gaining 23 cents to $19.99.
Gold stocks dropped 0.4 per cent, while February gold bullion ended down $27.50 to US$1,670.70 an ounce -- its lowest close since Aug. 30. March copper settled 1.3 cents lower to US$3.65 a pound.
Information technology stocks were the biggest decliners on the TSX with Research In Motion (TSX:RIM) moving back 19 cents to $13.47.
Air Canada (TSX:AC.B) unveiled plans to launch its new low-cost airline, Rouge, on July 1. The carrier will focus on leisure destinations in the United States and Caribbean and some routes in Europe. Shares of the company rose 13 cents to $1.83.
Heroux-Devtek (TSX:HRX) shareholders approved a $160-million special distribution resulting from the sale in August of its industrial and aerostructure operations to focus on its landing-gear business. Its shares increased 13 cents to $12.72.
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