Canada’s main stock index climbed more than 150 points Friday to close out the first quarter of the year in positive territory in spite of this month’s Silicon Valley Bank-related market turmoil.
The S&P/TSX composite index was up 158.90 points at 20,099.89. On Wall Street, U.S. markets also closed higher, with the Dow Jones industrial average up 415.12 points at 33,274.15, the S&P 500 index up 58.48 points at 4,109.31, and the Nasdaq composite up 208.44 points at 12,221.91.
Ending the month as well as the first quarter of 2023 on an upward swing is perhaps not what investors would have expected earlier in March, when the fallout from the collapse of Silicon Valley Bank south of the border sent stock markets tumbling.
“Today’s an important day that a lot of people will look at as a milestone day in trading. Markets globally have ended the quarter quite positively,” said Lesley Marks, chief investment officer with Mackenzie Investments.
“I think it’s been a good month, and I think people are probably surprised by that given what we saw in the banking sector.”
Leading Friday’s gains on the TSX was the technology sector, which rose 2.36 per cent on Friday. Riskier stocks in particular, benefited from a new report showing the rate of inflation across the United States slowed in February — raising hopes that the U.S. Federal Reserve will be able to ease off the gas on interest rates after a series of rapid rate hikes over the last year.
“What we want to see is supportive data to allow the Fed to at least continue on this slower rate increase path, or potentially pause with respect to increasing interest rates,” Marks said.
“The market likes that, and the sector that is the greatest beneficiary of lower rates is growth sectors like technology.”
A blitz of economic reports earlier in the year suggesting stubbornly high inflation raised worries the U.S. Fed could trigger a recession if it has to keep rates higher for longer.
Market fears about the state of economy then increased again in March, as the second- and third-largest U.S. bank failures in history had depositors rushing to pull their money out of Silicon Valley Bank and Signature Bank.
Fears about “contagion,” and the possibility of wider-spread bank failures, spurred a continent-wide market selloff earlier this month. Crude oil also took a nosedive over fears that the overall economy was in jeopardy.
However, with the acute crisis over and no indication that there will be further bank failures, confidence in the economy and stock markets is improving, Marks said. Even oil, which is still down significantly from the heights reached last June, rallied this week — with the benchmark West Texas Intermediate gaining more than $1 on Friday to close at $75.56.
The May crude contract was up $1.30 at US$75.67 per barrel and the May natural gas contract was up 11 cents at US$2.22 per mmBTU.
The June gold contract was down US$11.50 at US$1,986.20 an ounce and the May copper contract was up less than one cent at US$4.09 a pound.
The Canadian dollar was unchanged, trading at 73.89 cents US.
The largest telecommunications deal in Canadian history was green-lighted Friday after Rogers Communications Inc.’s $26-billion takeover of Shaw Communications Inc. received approval from Ottawa.
“That’s an important milestone. A lot of Canadian portfolio managers will own one or the other or both of those companies,” Marks said.
“So now they’ll start to look at if they want to deploy into other companies. They’ll also have more confidence and visibility around the outlook for the combined company as well.”
Shaw’s share price was up 3.27 per cent by day’s end, while Rogers’ stock closed the day down 2.88 per cent.
This report by The Canadian Press was first published March 31, 2023.
– With files from The Associated Press
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X, TSX:RCI-B, TSX:SJR-B)
Amanda Stephenson, The Canadian Press