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 markets rose on Thursday, as Canada's main stock index benefited from higher crude oil prices and continued strong earnings reports for the second quarter of 2021.
Kevin Headland, senior investment strategist at Manulife Investment Management, said the dog days of summer have brought expected choppiness to North American markets, but a positive economic backdrop has kept equity markets moving in a positive direction.
"The market is reacting to positive earnings, which have been very strong despite elevated expectations ... and markets are responding to that daily news on a daily basis" said Headland.
He added that the market seemed to brush off a U.S. private-sector jobs report that came in well under expectations with an addition of 330,000 jobs in July.
The S&P/TSX composite index gained 45.75 points at 20,375.48.
In New York, the Dow Jones industrial average was up 271.58 points at 35,064.25. The S&P 500 index was up 26.44 points at 4,429.10, while the Nasdaq composite was up 114.59 points at 14,895.12.
Headland noted that the market seemed to brush off a U.S. private-sector jobs report that came in well under expectations with an addition of 330,000 jobs in July.
Rebounding oil prices helped lift the TSX today, with the September crude oil contract up 94 cents at US$69.09 per barrel after dipping as low as US$67.75 on Wednesday. The TSX energy index was up 1.13 per cent to 121.56 points as a result.
The Canadian dollar was also back above 80 cents US, trading for 80.02 cents US compared with 79.71 cents US on Wednesday.
Headland said he expects the price of oil to follow the same lead as equity markets, by exhibiting some shakiness but continuing on an upward trend.
That belief is rooted in the fact that rising COVID cases may be affecting the pace of economic re-openings, but that things will continue to improve.
"The economy is going strong despite the Delta-plus variant," said Headland. "We believe things are getting incrementally better and not worse."
An overall positive day on the TSX was otherwise hampered by the gold subindex, which dropped 2.13 per cent to 302.25 points, and the materials subindex that includes mining and resources companies, which dropped 1.36 per cent to 318.93 points.
The December gold contract was down US$5.60 at US$1,808.90 an ounce and the September copper contract was up nearly 16 cents at nearly US$4.35 a pound.
Headland said he would expect gold to be performing much stronger in the current market environment as a hedge to inflation, and said the price of an ounce should be closer to US$2000. However, he pointed out that there are other inflation hedges available, such as crypto currencies which have performed relatively well over the last week.
Looking ahead, Headland said the biggest news will be coming Friday with jobs report in both the U.S. and Canada. The U.S. will be releasing non-farm payroll numbers, while Statistics Canada releases July employment numbers.
He said there is an expectation that the numbers in the U.S. will come out strong, but said it wouldn't necessarily be a bad thing if the numbers don't match targets.
That's because it could give the U.S. Federal Reserve reason to extend stimulus, which could be seen as positive by equity markets.
"It all depends on the reaction and the news flow and the point of view from the Federal Reserve on the data coming out," said Headland.
This report by The Canadian Press was first published Aug. 5, 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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