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.'
North American stock markets got a boost from a bipartisan U.S. infrastructure spending deal and overhang from Federal Reserve comments about interest rates.
"I think the Fed is really driving the bus right now when they talk about inflationary pressures," said Allan Small, senior investment adviser at IA Private Wealth.
Small said Fed officials have calmed market fears by walking back some of the comments last week about two interest rate hikes by repeating that it believes rising inflation is only temporary.
"When there's people talking about interest rates rising sooner than 2023, I think the market gets spooked," he said in an interview.
Confirmation Thursday that U.S. President Joe Biden has reached a deal for a US$1.2-trillion infrastructure package over eight years also supported positive investor sentiment.
"I think that just boosts a number of good-quality names and it's an anticipation of further growth, companies with the opportunity to further grow as government spends money on infrastructure," he said.
The S&P/TSX composite index closed up 50.73 points to 20,215.12.
In New York, the Dow Jones industrial average was up 322.58 points at 34,196.82 The S&P 500 index was up 24.65 points to a record high of 4,266.49, while the Nasdaq composite was up 97.98 points to a record 14,369.71.
Small said he believes positive economic data in Canada, such as higher Canadian wholesale trade numbers and the Export Development Canada's Trade Confidence Index jumping to its highest level in more than 20 years, had no impact on market gains in Canada.
And in the U.S. the country's jobless claims, which fell less than expected, had minimal impact.
"I don't think this is a data-driven rally today, I think it's a Fed driven rally and I think it's an administration rally meaning what's coming out of Washington."
However, he said the global economic reopening is underpinning the move by stock markets higher.
Seven of the 11 major sectors on the TSX were higher, including health care, energy and materials.
Health care climbed 3.4 per cent as shares of Canopy Growth Corp. gained 5.2 per cent.
Energy increased as crude oil prices inched higher to move PrairieSky Royalty Ltd. up 2.7 per cent.
The August crude oil contract was up 22 cents at US$73.30 per barrel and the August natural gas contract was up 8.5 cents at nearly US$3.44 per mmBTU.
The Canadian dollar traded for 81.20 cents US compared with 81.39 cents US on Wednesday.
Materials was slightly higher despite a dip gold and copper prices which prompted a 1.9 per cent decline by Equinox Gold Corp. and a 1.7 per cent drop by Kinross Gold Corp.
The August gold contract was down US$6.70 at US$1,776.70 an ounce and the July copper contract was down two cents at US$4.31 a pound.
The heavyweight financials sector, including shares of some large banks, were higher, in anticipation of favourable stress test results in the U.S. after markets closed that would allow U.S. banks to increase dividends and share buybacks.
"We tend to move in general in sympathy with the United States," Small said, noting that Canada's financial regulator will determine when domestic banks can increase payouts.
He said Canada's main stock index would accelerate if commodities again strengthened, in particular if crude oil goes to US$100 a barrel as some analysts have suggested.
"You would see bank stocks rise, you will see our dollar rise and the TSX probably would be, you know 21,000 or something like that," he said. "That's the kind of nation we are. We do well in this type of environment and it hasn't been this type of environment for a long, long time."
This report by The Canadian Press was first published June 24, 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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