Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Canada's main stock index partially recovered from Monday's steep decline as a re-elected Liberal government gave investors hope of more stimulus spending to come.
The S&P/TSX composite index closed up 89.75 points to 20,244.29, a day after losing 335.82 points.
In New York, the Dow Jones industrial average was down 50.63 points at 33,919.84. The S&P 500 index was down 3.54 points at 4,354.19 while the Nasdaq composite was up 32.50 points at 14,746.40.
Although Trudeau's Liberals were expected to retain power, their win suggests there's a good chance its plan to spend $78 billion over five years will take place even with a minority government, said Giles Marshall, portfolio manager at Fiduciary Trust Canada.
"The market may well have taken that positively that we're going to see both very loose monetary policy as far as the eye can see, combined with expansionary fiscal policy for the next several years for sure," he said in an interview.
The heavyweight financials sector took a bit of a hit, however, in a risk-on day because of the Liberals plan to pay for the spending by raising corporate taxes on banks and insurers. It has proposed raising the surtax on earnings over $1 billion by three percentage points to 18 per cent.
That would affect earnings of all Canadian banks and at least three insurers over the medium-term and affect their ability to raise dividends and buy back shares, Marshall said.
The financials sector was up just 0.31 per cent with several banks and insurers like Manulife Financial lower.
After global markets were down eight of the 10 previous sessions, a relief rally was to be expected, Marshall said.
"(But) really not a very convincing bounce after almost two weeks of softness."
Several issues that spooked markets to start the week lurk in the background, including fears of a contagion from massive debt owed by Chinese developers, worries that the U.S. debt ceiling battle accelerate in Congress and how quickly the Federal Reserve will taper stimulus spending.
Fed Chairman Jerome Powell is expected to unveil the central bank's plans Wednesday, with observers not expecting the bank to reduce US$120 billion a month in bond purchases until later this year.
"I think the market is anxious about that even though I think there's a definitely strong consensus that we will see some tapering before year-end," Marshall said, adding that COVID-19 lurks in the background.
"So I think there's still quite a lot of factors or issues that the market needs to work through."
All 11 major sectors on the TSX were up after they all lost ground on Monday.
Health care climbed 2.2 per cent with Bausch Health Companies Inc. up 8.1 per cent.
Energy gained one per cent on a slight increase in crude oil prices as shares of Enerplus Corp. rose 3.5 per cent and Imperial Oil was up 3.4 per cent.
The November crude oil contract was up 35 cents at 70.49 cents per barrel and the October natural gas contract was down 18 cents at US$4.81 per mmBTU.
The Canadian dollar traded for 78.12 cents US compared with 77.95 cents US on Monday.
Materials increased slightly with forest products companies such as Interfor Corp. and Canfor Corp. seeing their shares increase 5.4 and 2.9 per cent, respectively.
The December gold contract was up US$14.40 at US$1,778.20 an ounce and the December copper contract was up 1.15 cents at nearly US$4.13 a pound.
This report by The Canadian Press was first published Sept. 21, 2021.
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
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