By Fergal Smith
(Reuters) – Canada’s main stock index extended its November gains on Friday to hit a new record, with technology and industrial shares rising as investors welcomed more clarity on the economic outlook following the outcome of the U.S. election.
The S&P/TSX composite index ended up 104.48 points, or 0.4%, at 25,648.00, surpassing Thursday’s record high. This month, interest rates rose by 6.2%, the fifth monthly gain in a row and the largest since November last year.
“We’ve climbed that wall of worry,” said Greg Taylor, portfolio manager at Purpose Investments.
“There was a lot of nervousness in the run-up to the (US) elections and now we at least have more clarity about what is going on. We are more confident that there will be some more growth aspects in the US and that should happen. help profits as the economy continues to thrive and regulations fall.”
Newly elected US President Donald Trump has promised to cut taxes and relax business regulations.
While these measures could stimulate the economy, the potential for higher budget deficits under the Trump administration, as well as inflation and immigration policies, could reduce the prospects for Federal Reserve rate cuts and raise borrowing costs in the long run, analysts say .
“The main thing that everyone will be looking at is what happens to (bond) rates and the (U.S.) dollar going forward, because if rates and the dollar continue to rise, that will be a pretty big headwind,” Taylor said.
The Canadian dollar posted its third consecutive monthly decline against its US counterpart in November, while the Canadian economy grew just 1% in the third quarter, prompting investors to bet on another outsized rate cut from the Bank of Canada.
The technology sector added 1% on Friday and industrial services rose 0.5%. Seven of the ten major sectors ended higher.
(Reporting by Nikhil Sharma in Bengaluru; Editing by Shreya Biswas and Deepa Babington)
