2023-06-30 21:37:00
(Illustration: Camille Charbonneau)
The flagship index of the Toronto Stock Exchange ended the first half of the year on a solid performance, registering a gain of more than 200 points, while the major American indices also advanced.
Although the TSX hasn’t done as well comparatively due to its heavy concentration in energy stocks — a sector that has been hurt by falling crude oil prices in recent months — markets on both sides of the border have exceeded expectations for the first six months of 2023.
“The first half of this year was a big surprise for many people. There’s always a lot of money being put to work here, and that’s obviously what we’re seeing here today,” Mr. Archibald explained.
Investors are feeling optimistic mid-year, Archibald noted, because an economic recession has yet to materialize.
For much of the past year, central bank interest rate hikes raised fears of a hard landing in the economy. But with inflation easing — annual consumer price inflation in Canada was 3.4% in May, its slowest level in nearly two years — many investors believe the end of the bull cycle rates is close.
That might mean it’s possible for the global economy to dodge the recession many predicted, Archibald said. “I was definitely on the risk side,” he admitted. I personally think the market will continue to rise.”
Even crude oil, which has lost regarding US$10 a barrel since April on fears of a global economic contraction, rose on Friday to close above US$70.
According to Mr. Archibald, the rise in oil prices of the past few days probably has more to do with the weakness of the American dollar than anything else, but he added that the longer the dreaded recession does not materialize, the more likely it is crude prices rebound.
“If we get more definitive data that the economy is not in a recession and we’re going to see a soft landing, then I think we’ll see some very dynamic catch-up trading in energy stocks. I just don’t know when it’s going to happen,” he said.
Heading into the second half of 2023, corporate financial results for the second quarter will be the “trump card” when it comes to stocks, Archibald said.
Once earnings reports start rolling out in the coming weeks, investors will have a better idea of the fairness of their economic outlook.
“I don’t want to sound overtly bullish, but I think the path for equities is pretty good,” he argued.
“If earnings go up, then I think there will still be good times ahead of us.”
Here are the winners and losers for June 30, 2023:
The S&P/TSX index of the TSE
Price Change in Canadian dollars Change in %
Winners
Taiga Motors (TAIG)
1,74
0,26
17,568
Medexus Pharmaceuticals (MDP)
1,86
0,20
12,048
VerticalScope Holdings (FORA)
3,67
0,32
9,552
losers
Calfrac Well Services (CFW.WT)
1,40
-0,18
-11,392
Ivanhoe Electric (IE)
17,22
-1,28
-6,919
HLS Therapeutics (HLS)
5,76
-0,35
-5,728
Only titles with a value greater than $1 are considered in the Winners/Losers ranking.
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