TORONTO — Canada's main stock index started the trading week slightly higher as North American markets were stable ahead of a busy week for U.S. corporate earnings, while the loonie rose against the U.S. dollar.
"I think this is a market on a Monday that's taking a bit of a breather in anticipation of more data ahead this week, particularly earnings data, to see just how much the gas tank can be refuelled and a resumption of the rally," said Craig Fehr, investment strategist, Edward Jones.
First-quarter earnings results have been very strong among the roughly one-quarter of the S&P 500 that's reported so far, with another third to come this week.
The results so far, as an early indication, look pretty good and this is why we're seeing equity markets sit within a whisper of all-time highs," he said in an interview.
Earnings growth for the quarter and year could be 25 to 30 per cent year over year, which is consistent with the economic rebound that is building momentum.
"Today the moves are lacking a lot of conviction across the board and we're really seeing a market that's in a bit of a holding pattern."
The S&P/TSX composite index closed up 68.23 points to 19,170.56 after hitting an intraday high of 19,186.75 that's less than 200 points off the record.
In New York, the Dow Jones industrial average was down 61.92 points at 33,981.57. The S&P 500 index was up 7.45 points to a record close of 4,187.62, while the Nasdaq composite was up 121.97 points at 14,138.78.
Fehr said markets are already pricing in strong earnings growth, validation of what markets are anticipating from corporations.
"I do think that we are going to see some stumbles along the way and it might be … companies that fail to get over that expectation hurdles, that perhaps get disproportionately punished on a very, very short-term basis," he said.
"More broadly, any time you're in an environment where the economy's going to grow at a well above-average pace and corporate profits are rising at better than a 20 per cent clip, that is a broadly healthy backdrop for markets to do well."
The Canadian dollar traded for 80.57 cents US compared with 80.07 cents US on Friday.
The appreciation of the loonie continued after the Bank of Canada's decision last week to cut back bond purchases, becoming the first global central bank to begin tapering stimulus.
The U.S. Federal Reserve will give its assessment on Wednesday in a rate decision that will be closely watched by market observers for any hint of change in policy.
But Fehr doesn't expect any change to bond purchases or interest rates until there is an "ingrained economic rebound gaining momentum."
"I think we're well on that path but the Fed has been clear to this stage that they expect that inflation is going to rise in the coming months, which it will, is not at this stage enough to be a catalyst for the start to withdraw stimulus."
Health care, technology and energy were the leaders on the TSX, while the four laggards were bunched closely together.
Health care gained 1.9 per cent with shares of Aphria Inc. climbing 3.7 per cent.
A 14.6 per cent gain from Hut 8 Mining Corp. and 4.9 per cent increase by Shopify Inc. helped lift technology in line with movement by Nasdaq in the U.S.
Energy rose despite a dip in crude oil prices with PrairieSky Royalty Ltd. up 2.2 per cent and Crescent Point Energy Corp. up 1.6 per cent.
The June crude oil contract was down 23 cents at US$61.91 per barrel and the June natural gas contract was up 5.6 cents at US$2.87 per mmBTU.
Materials also moved slightly higher on gains from metals.
The June gold contract was up US$2.30 at US$1,780.10 an ounce and the May copper contract was up 10.5 cents at US$4.44 a pound.
Shares of First Quantum Minerals Ltd. rose by 7.6 per cent while Fortuna Silver Mines Inc. plunged 18.1 per cent on its $1-billion deal to buy Roxgold Inc.
This report by The Canadian Press was first published April 26, 2021.
Companies in this story: (TSX:FVI, TSX:FM, TSX:ROXG, TSX:PSK, TSX:CPG, TSX:APHA, TSX:SHOP, TSX:HUT, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press