TORONTO — North American stock markets rose for a fifth straight month in August despite a drop Monday in the TSX, while the Canadian dollar reached its highest level since early January.
Canada's main stock index posted a triple-digit decline in a broad-based drop led by energy with the S&P/TSX composite index closing down 191.35 points at 16,514.44.
South of the border, the S&P 500 index and the Nasdaq composite set new record highs largely on the back of Apple and Tesla shares surging relating to stock splits.
In New York, the Dow Jones industrial average closed down 223.82 points at 28,430.05. The S&P 500 index was down 7.7 points at 3,500.31, while the Nasdaq composite was up 79.82 points at 11,775.46.
Despite the divergent paths of growth and value stocks to start the trading week, August was resilient rising 2.4 per cent in one month and nearly 24 per cent since the end of March.
"The mood in the market has been quite buoyant throughout the month and risk appetite has been emboldened by primarily the monetary and fiscal response. That's been the main driver of equity market returns since the March lows," said Candice Bangsund, portfolio manager for Fiera Capital.
The mood was positive before markets opened Monday on Chinese PMI survey results that were stronger than expected, reinforcing that the country's recovery remains in tact, she said.
But the early gains dissipated as some investors marked the end of the month to take some profits, Bangsund said in an interview.
"We've got an environment of improving global growth prospects and the abundance of policy support, but of course, the virus is still alive and well and proliferating across the globe, so I think investors are maybe just taking a breather after some fairly robust gains throughout the month."
Low interest rates from the Federal Reserve and government financial support have boosted equity markets. While Friday's U.S. jobs reports is expected to see more jobs created and the unemployment rate dipping back to single digits, millions of Americans remain out of work.
"We're nowhere near pre-pandemic levels on the employment front and that too is going to ensure that monetary policy remains accommodative for longer in order to rebuilld that momentum and to close that gap in the economy."
The Fed's accommodative support has hurt the U.S. dollar, but together with rising energy prices have helped the loonie.
The Canadian dollar traded for 76.68 cents US compared with 76.35 cents US on Friday.
The energy sector lost more than three per cent with Enerplus Corp. falling 5.5 per cent, Crescent Point Energy Corp. down 4.2 per cent and Suncor Energy Inc. off 3.8 per cent on the day.
The October crude contract was down 36 cents at US$42.61 per barrel and the October natural gas contract was down 2.7 cents at US$2.63 per mmBTU.
Materials was the lone sector in the green. It rose 0.11 per cent with Novagold Resources Inc. up nearly eight per cent.
The December gold contract was up US$3.70 at US$1,978.60 an ounce and the December copper contract was up 4.2 cents at US$3.06 a pound.
Bangsund says investors will be watching closely to see if U.S. politicians can reach a compromise on another fiscal package, if there are signs of progress on a viable coronavirus vaccine, if there's a spike in COVID-19 infections with students headed back to classrooms and if presidential election polls change heading into the Nov. 3 vote.
"I think it's going to be a bumpy September," she said.
"That very ample central bank response will help to limit any material downsides. If we did see a little bit more volatility, I think it would be short-lived, but I think it'll be unven. It's likely not going to go in a straight line from here, but nonetheless the environment is fairly constructive in general."
This report by The Canadian Press was first published Aug. 31, 2020.
Companies in this story: (TSX:ERF, TSX:CPG, TSX:SU, TSX:NG, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
