Canadian stock market melts up, in a bullish phrase seen repeated in U.S. markets Tuesday. Renewed optimism, particularly around improving trade relations, has investors in a good mood. This momentum in both advocacy and markets comes on the heels of the end of the last Canadian federal election. Mona Mahajan, head of investment strategy at Edward Jones, emphasized the importance of this political event to investors.
His government is a handful of seats away from a parliamentary majority. It has managed to eliminate much of the uncertainty that came with the election cycle. “Not a huge surprise to see Carney emerge as the victor here, but perhaps a bit of a sigh of relief to have one source of uncertainty behind in terms of elections being over,” Mahajan stated.
On the industrial front, the June crude oil contract dropped US$1.63 to close at US$60.42 per barrel. By comparison, the June natural gas contract closed at six cents higher at US$3.39 per mmBTU. The gold market was under pressure too as the June gold contract sank US$14.10 to US$3,333.60 an ounce. At the same time, the July copper contract slipped into the red, down two cents to US$4.87 a pound.
The Canadian dollar was slightly higher at 72.22 cents U.S., versus 72.20 cents U.S. on Monday. This small uptick is a testament to the strong overall market attitude reigning even with volatile and unstable commodity pricing.
Investor sentiment has taken a wildly optimistic turn as the first earnings reports roll in from U.S. companies. So far, more than 43 percent of S&P 500 companies have reported their first-quarter results. Remarkably, 75 percent of them beat earnings expectations. Mahajan highlighted this trend, stating, “I think generally in the U.S. we are getting a little bit of better tone and sentiment around trade.”
She further elaborated on the broader implications of these developments by saying, “It does feel like progress on trade is moving in the right direction. There’s a cool-down in the temperature as well, not only on trade but around central bank independence and Fed independence in particular.”
