The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
The Canadian stock market posted its longest streak of gains ever as a rally in commodities pushed the benchmark higher for a 14th straight session.
The S&P/TSX Composite Index rose 0.3% to an all-time high. It has added about C$237 billion ($191 billion) in market value during its recent winning streak, according to data compiled by Bloomberg. US oil prices hit $85 a barrel for the first time since 2014 and metals prices also climbed, fuelling Monday’s rally. Energy and materials make up about 25% of the Canadian benchmark.
“The TSX is one of the best inflation hedges you can find,†Stefane Marion, chief economist and strategist at National Bank of Canada, said via phone. In a recent analysis, Marion found that the S&P/TSX posted an annualized return of 2.3% during inflationary periods due to its commodity exposure, versus a decline of 5.9% for the S&P 500.
The Canadian stock market has been on a tear amid a surge in cyclical and value stocks as the nation’s economy reopens thanks to a waning Covid-19 pandemic. Energy, real estate and financials are the top gainers on the S&P/TSX this year.
Foreign investors are optimistic on the nation’s equity market. They’ve added more than $22 billion as of the end of August, thanks in part to the run in cyclicals and also due to a strong Canadian dollar. The loonie is the best-performing currency against the US dollar among its G-10 peers this year, rising about 2.7%.
While the S&P/TSX has gained 22.1% this year, slightly surpassing the 21.6% advancement in the S&P 500, Canadian stocks are still cheap compared to the US. The price to earnings ratio for Canadian equities is about 15.8 times compared to the 21 times for the S&P 500.