The Canadian dollar rallied with equities on Tuesday as a victory for Justin Trudeau’s Liberal Party spurred optimism that increased spending will help lift economic growth.
The S&P/TSX composite index grew 83.54 points to close Tuesday at 13,841.92
Equities have rallied 4% in October as the benchmark gauge recovers from the worst quarter since 2011.
The Canadian dollar regained 0.22 cents at 77.02 cents U.S.
Trudeau’s Liberals won a surprise majority mandate, putting an end to Conservative Prime Minister Stephen Harper’s decade-long rule. Trudeau campaigned on a plan that included running $25 billion in deficits for three years to stimulate the economy with infrastructure spending, giving a boost to construction companies. Legalizing marijuana is also a part of the platform, sending shares of medicinal producers up.
Engineering firms and medicinal marijuana producers have been the early beneficiaries in the stock market as investors anticipate changes from the incoming government.
Aecon Group Inc. climbed 5% to a 13-month high of $15.43, and SNC-Lavalin Group Inc. increased 1.4% to $42.95 as engineering and construction companies rallied on the promises of more infrastructure spending.
The Liberals pledge an average of $4.2 billion of new spending on projects including bridges over the next four fiscal years starting in 2016 as the incoming government seeks to reverse a so-called technical recession with the economy shrinking in the first half of the year. Compared with Trudeau’s plan for $25 billion in deficits over the next three years, both Harper and New Democrat Leader Tom Mulcair had pledged balanced budgets.
Marijuana stocks climbed. Smaller peers Aphria Inc. and Mettrum Health Corp. rallied more than 5%. Canopy Growth Corp. erased a gain of as much as 21% late in the afternoon to sit at $2.00, or 8.3% behind Monday’s close. The stock has jumped 32% this month.
On the economic front, Statistics Canada reported wholesale trade edged down 0.1% to $55.3 billion in August. Declines in four sub-sectors, in particular the machinery, equipment and supplies sub-sector, accounted for the decrease. Higher sales in the miscellaneous sub-sector partially offset these declines
ON BAYSTREET
The TSX Venture Exchange dropped 1.13 points to 550.80
All but two of the 13 TSX subgroups were higher, as gold journeyed 3.9%, materials soared 2.3%, and energy gushed 1.4%.
The two laggards were health-care, down 6.1%, and information technology, off 0.9%.
ON WALLSTREET
U.S. stocks closed lower Tuesday, with the Dow Jones industrial average snapping a three-day winning streak, as Wall Street digested a slew of corporate earnings reports and U.S. housing starts data.
The Dow Jones industrial average faded 13.43 points to 17,217.11, led lower by IBM and with United Technologies leading advancers
The S&P 500 dipped 2.92 points to 2,030.74, with health-care leading four sectors lower and telecommunications the greatest advancer.
The NASDAQ index lost 27.13 points to 4,878.34
IBM reported earnings per share that were slightly above estimates on Monday, but its revenues came in far below consensus, pushing the stock down 5.8% to $140.64 U.S., its lowest levels since October 2010.
United Technologies, Travelers and Verizon, also reported quarterly results. Verizon and Travelers both beat Wall Street estimates for earnings and revenue, while United Technologies beat on earnings per share but missed on revenue.
Companies scheduled to report after the bell include Yahoo, Chipotle Mexican Grill and VMWare. Others reporting later this week include Alphabet, Amazon.com and Microsoft.
Amazon.com said it will create over 100,000 holiday season jobs, above last year's 80,000.
Aetna said its proposed takeover of Humana was approved by shareholders of both companies. The deal is expected to close in the second half of next year.
Ferrari is expected to price its IPO as high as $53 U.S. per share, according to sources.
Tesla Motors' stock fell more than 9% after Consumer Reports said the company's Model S is "worse than average" in terms of reliability.
Investors also took in September housing starts data, which came in well above expectations at 1.206 million.
Prices for 10-year U.S. Treasuries dipped, raising yields to 2.07% from Monday’s 2.03%. Treasury prices and yields move in opposite directions.
Oil prices retreated 34 cents a barrel to $45.55 U.S.
Gold prices remained positive $3.70 to $1,176.50 U.S. an ounce.
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