Newspaper article The Canadian Press

Traders Look to TSX to Build on Gains after Hitting 28-Month High

Newspaper article The Canadian Press

Traders Look to TSX to Build on Gains after Hitting 28-Month High

Article excerpt

Traders look to TSX to build on gains

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TORONTO - Traders will be anxious to see this week if the Toronto stock market can carry on the steady gains racked up during October that took the TSX to its highest levels in more than two years.

Investors will also look to the Bank of Canada's latest interest rate announcement and what is expected to be a steady flow of economic reports that were postponed because of the lengthy partial U.S. government shutdown.

The stars seem to be finally aligning for the Toronto Stock Exchange, which closed above 13,000 last week for the first time since late July 2011, a sign that the resource-heavy market is perhaps bouncing back after suffering through falling commodity prices, the European Union debt crisis and a slowing in the Chinese economy.

"Canada is always a late cycle market because of the resource domination," observed Wes Mills, chief investment officer at Scotia Asset Management PM Advisor Services.

"So, as the global economy continues to improve, Canada will start showing up more on people's radar."

A variety of indicators bode well for the TSX, including a sharp decline in the price differential between West Texas Intermediate crude and Brent crude, along with data last week that showed the Chinese economy rebounded in the latest quarter to 7.8 per cent from a two-decade low of 7.5 per cent in the second quarter. Also, the European Union is also offering signs of clawing its way out of a deep malaise.

Mills said that global growth is improving, with the signs expecting to continue into 2014.

But it's not just resource stocks that have propelled the Toronto exchange to a point where it is up 5.65 per cent year-to-date.

The other major pillar, financials, is up 15 per cent year-to-date and more than three per cent for October alone.

"The financials were held back a good part of the year... on views that the housing market was too expensive, going to roll over and there was excessive credit risk in the banks," said Mills.

"(But) the housing market has done quite well. …

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