Gold stocks push TSX to two-week highs

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Canada’s benchmark stock index climbed higher on the first trading day of 2023, touching a more than two-week high as an uptick in gold prices supported gains.

At 1005 a.m. ET (1505 GMT) on Tuesday, the Toronto Stock Exchange’s S&P/TSX composite index was up 151.84 points, or 0.78%, at 19,536.76.

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“Seasonality is in play with the January effect, in which prices trade meaningfully higher to start the year as investors bolster their stock holdings and tax loss selling ends,” said Brandon Michael, senior analyst at ABC Funds in Toronto.

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Gold miners soared 4.1%, as spot gold prices touched more than a six-month high as investors positioned for the Federal Reserve’s latest policy minutes.

The broader materials sector were also among the top gainers with a 4% jump.

The main stock index was bogged down by geopolitical tensions, a hawkish Bank of Canada and fears of a recession, ending the previous year lower by 8.4%. Entering into 2023, the IMF warned of an impending global slowdown in economic activity.

Almost in confirmation, data showed that Canadian factory activity remained in contraction for the fifth straight month owing to weakening demand and an uncertain economic outlook.

“It is increasingly likely that the global economy is entering a meaningful slowdown, considering the lagged and variable effects of rising interest rates,” Michael added.

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Later in January, the central bank is expected to continue on its demand denting path by raising rates by 25 basis points.

Among company news, Shaw Communications slid 1.6% after top Canadian brokerages downgraded the telecom firm to “market perform” from “outperform.”

Shopify Inc added 1.8% as it launched a product that would allow companies to customize tools and components required to build their online store, ramping up its efforts to attract big retailers. The information technology sector rose 1.2%. (C$1=$0.7315) (Reporting by Johann M Cherian in Bengaluru; Editing by Shailesh Kuber)

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