North American stock markets climb to record highs amid Democrat gains in Washington

TORONTO — Stock markets across North America, including Canada's main index, surged to record highs Thursday on anticipation that a Democratic electoral sweep in the U.S. will result in greater stimulus spending.

After providing US$900 billion near the end of 2020, Congress is expected to be pushed to spend nearly US$2 trillion after Joe Biden is sworn in as president in less than two weeks, said Allan Small, senior investment adviser at HollisWealth.

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"More stimulus is offsetting the chance that the Democrats could increase taxes in the near-term," he said in an interview.

The S&P/TSX composite index surpassed 18,000 for the first time and closed up 199.46 points to 18,027.57 after hitting an intraday high of 18,051.75.

That's above the previous record of 17,970.51 set last February and the record close of 17,944.06 hit on the same day.

In New York, the Dow Jones industrial average was up 211.73 points at 31,041.13. The S&P 500 index was up 55.65 points at 3,803.79, while the Nasdaq composite was up 326.69 points at 13,067.48. All three reached record highs in earlier trading.

Stock markets recovered from weakness heading into Wednesday's closing that was spurred on by riots by supporters of U.S. President Donald Trump that took place in the U.S. capital.

"It looks like whatever they sold off at the end of yesterday they made back today," Small said, adding that computer algorithms weren't impacted by outrage over the melee.

"Computers keep trading even though certain investors may become emotional when it comes to something like that that happened yesterday."

Nasdaq reversed Wednesday's losses with technology becoming the leading sector on the TSX.

It rose 2.3 per cent with Shopify Inc. up 6.9 per cent. The e-commerce company, along with tech companies in the U.S., climbed after they took steps against Trump for his role fomenting the riot.

Shopify terminated its relationship with stores affiliated with Trump. Facebook removed the video and banned him indefinitely from the platform Thursday, while Twitter also took it down but only kept him off its social media site for 12 hours.

"It seems like some of these tech names have gotten on the bandwagon of blaming the current president for the situation yesterday," said Small.

Health care rose 1.5 per cent with cannabis company Aphria Inc. increasing 2.4 per cent.

Energy gained 1.5 per cent as crude oil prices continued to rise a day after Saudi Arabia said it would cut oil production by one million barrels per day.

The February crude contract was up 20 cents at US$50.83 per barrel and the February natural gas contract was up 1.3 cents at US$2.73 per mmBTU.

Shares of Husky Energy Inc. and Vermilion Energy Inc. increased 5.1 and 4.5 per cent, respectively.

The Canadian dollar traded for 78.70 cents US compared with for 78.83 cents US on Wednesday.

Financials rose as banks and insurance companies benefited from increasing bond yields. U.S. 10-year treasuries moved above one per cent to the highest level since before the COVID-19 pandemic.

"This is what the banks were waiting for, even though the banks have been able to make money with a very narrow margin," Small said.

Rising U.S. interest rates are advantageous for Canadian banks which have grown their presences in the United States, he said.

Materials inched higher as metals prices increased.

The February gold contract was up US$5 at US$1,913.60 an ounce and the March copper contract was up 4.55 cents at nearly US$3.70 a pound.

This report by The Canadian Press was first published Jan. 7, 2021.


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