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S&P/TSX composite climbs past 21,000 for the first time, U.S. markets also up

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Strong performances from tech and financial companies led Canada's main stock index to close at a record high as it topped the 21,000 mark for the first time, with U.S. stock markets also rising.

Craig Jerusalim, portfolio manager at CIBC Asset Management, said the earnings growth outlook for energy companies looked strong on Tuesday, as oil and gas prices continued to rise.

At the same time, the financial sector got a lift from the possibility that higher inflation could lead to higher interest rates, which would be good news for bank earnings.

"The Canadian market is once again exceeding all-time market highs," said Jerusalim.

"The biggest theme in equities today was that defensives were lagging while the growth sectors and cyclicals were leading the charge through these all-time record highs." 

The S&P/TSX composite index was up 101.62 points at 21,086.99. 

The TSX’s financial index was up 0.38 per cent to 388.32 points, and the information technology index was up 1.18 per cent to 231.57 points.

In New York, the Dow Jones industrial average was up 198.70 points at 35,457.31. The S&P 500 index was up 33.17 points at 4,519.63, while the Nasdaq composite was up 107.28 points at 15,129.09.

In the U.S., Jerusalim said there was weakness showing in longer term bonds, which was a factor bringing the U.S. dollar down.

Commodities benefited from the weakness in the greenback, with the December gold contract up US$4.80 at US$1,770.50 an ounce. However, the December copper contract was down two cents at US$4.70 a pound.

The Canadian dollar also rose compared to the U.S. dollar, with the loonie trading for 80.93 cents US, compared with 80.78 cents US on Monday.

Jerusalim said oil prices continued to rise as travel demand increases and COVID-19 cases ease in some parts of the world. The December crude contract was up 75 cents at US$82.44 per barrel.

"The direction of least resistance is clearly still higher and it all comes down to supply and demand," said Jersualim.

"Right now with the COVID restrictions lifting and travel demand increasing, demand continues to move higher, especially in emerging markets, while supply continues to be rather disciplined."

More data about oil inventories is set to be released on Wednesday and will give a clearer picture on the supply and demand situation, Jerusalim said.

Multiple big-name Canadian companies will be releasing quarterly results in the coming days, he noted. 

Canadian National Railway reported Tuesday evening, while Canadian Pacific Railway reports Wednesday morning. Rogers Communications Inc. will also report on Thursday, Jerusalim said.

Meanwhile in the U.S., he said Netflix will report earnings and provide a look into its international reach after its success with international hit shows like "Squid Game."

This report by The Canadian Press was first published Oct. 19, 2021.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Salmaan Farooqui, The Canadian Press