North American stock markets hit record highs on easing of virus concerns

TORONTO - North American stock markets inched up to new record highs Tuesday on a broad-based rally resulting from an easing of novel coronavirus concerns.

Risk assets rallied as fears around the virus were decelerating, said Natalie Taylor, a portfolio manager with CIBC.

"We're seeing a slowing of new cases, which aligns actually quite well with the two-week incubation period when the quarantines were started," she said in an interview, adding that businesses have started to reopen in China.

In his congressional testimony, Federal Reserve chairman Jerome Powell said the central bank is monitoring the virus but made no change to his economic outlook, saying the U.S. economy appears durable.

As a result, markets are discounting a small interest rate cut this year.

The S&P/TSX composite index closed up 36.54 points at 17,777.11 after setting an intraday record high of 17,822.15.

In New York, the three major stock markets set new intraday records. The Dow Jones industrial average closed down 0.48 of a point at 29,276.34. The S&P 500 index and the Nasdaq composite both closed at record highs with the S&P gaining 5.66 points to 3,357.75 and Nasdaq up 10.55 points at 9,638.94.

The Canadian dollar traded for 75.23 cents US compared with an average of 75.08 cents US on Monday.

Seven of the 11 major sectors on the TSX were up, led by health care, consumer discretionary and materials.

A gain in base metal prices pushed shares of Teck Resources Ltd. and First Quantum Minerals Ltd. up four and 3.7 per cent respectively.

The April gold contract was down US$9.40 at US$1,570.10 an ounce and the March copper contract was up 3.25 cents at US$2.58 a pound.

Energy rose as fears about lower Chinese demand were tempered by the virus outlook.

The March crude contract was up 37 cents at US$49.94 per barrel and the March natural gas contract was up 2.2 cents at US$1.79 per mmBTU.

Technology was slightly lower even though Shopify Inc. and Blackberry Ltd. climbed. The U.S. technology sector was under pressure after the Federal Communications Commission talked about reviewing past mergers of the five big tech companies: Microsoft, Facebook, Alphabet, Apple and Amazon.

Partially offsetting the share price declines was positive reaction following a judge's approval of T-Mobile's US$26.5 billion takeover of Sprint.

Taylor said she can see markets continuing to rise as coronavirus risks dissipate and signs of global economic stability shifts to recovery.

"There's some hope that that's likely to stabilize so maybe a small valuation recovery in more cyclical sectors but then it really needs to be an earnings driven recovery from there and I think that that's not impossible given the slowdown that we've seen over the last year."

This report by The Canadian Press was first published Feb. 11, 2020.

Companies in this story: (TSX:BB, TSX:SHOP, TSX:TECK.B, TSX:FM, TSX:GSPTSE, TSX:CADUSD=X)

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