TORONTO -- Canada's main stock index gained 12.4 per cent in the first quarter despite a losing day in the last trading session in a tepid March.
After underperforming other markets for years, the Toronto stock market bested markets in Europe, emerging countries and Japan in the first three months of 2019, says Michael Greenberg, portfolio manager at Franklin Templeton Multi-Asset Solutions.
It slightly outperformed the 11 per cent gain by the Dow Jones industrial average. But it lagged the Nasdaq composite, which is up 16.5 per cent so far this year, and the 13 per cent increase by the S&P 500 index.
"It's actually been a very good quarter for Canadian assets. So I think it's a great lesson to investors to separate the economy from the stock market," he said in an interview.
North American markets bounced back from oversold levels late last year that was harsh for investors.
The recovery since January has kept the TSX 2.8 per cent below the high set last summer.
The S&P/TSX composite index closed down 53.40 points to 16,102.09 on Friday, after hitting an intraday high of 16,212.68.
The market ended the week slightly higher than the previous week and at the end of February.
Toronto's market fell as eight of the 11 major sectors lost ground, led by financials, energy and materials, which together account for about 61 per cent the market.
Energy lost half a per cent despite crude oil prices rising above US$60 per barrel for the second time since November.
The May crude contract was up 84 cents at US$60.14 per barrel and the May natural gas contract was down five cents at US$2.66 per mmBTU.
The June gold contract was up US$3.20 at US$1,298.50 an ounce and the May copper contract was up 6.3 cents at US$2.94 a pound.
Technology led the day as BlackBerry Inc. rose 13 per cent after posting strong fourth-quarter results. It was followed by the cannabis-heavy health sector and consumer staples.
Health care was the best performer in the quarter, gaining 48 per cent, followed by technology (25 per cent), real estate (17.7 per cent), energy (16.5 per cent), utilities (16.3 per cent), industrials (15.5 per cent), financials (11 per cent), consumer staples (10.4 per cent), telecommunications (10.2 per cent), consumer discretionary (10.15 per cent) and materials (nine per cent).
The Canadian dollar traded at an average of 74.83 cents US Friday, compared with an average of 74.47 cents US on Thursday, after Statistics Canada reported the economy grew 0.3 per cent in January, in excess of expectations.
The positive report likely eases the chances that the Bank of Canada will actually cut interest rates, Greenberg said.
Greenberg said markets were helped in the quarter by a more dovish tone by central banks, including the Bank of Canada.
"That's probably not a bad environment for risk assets in the sense that central banks not raising rates is kind of keeping financial conditions maybe from tightening much more and that all else being equal could be helpful."
He expects the market will experience volatility going forward and he's "less constructive" on risk assets in part because of ongoing global risks from Brexit, European parliamentary elections and uncertainty around U.S. political and trade policy.
"We still are not necessarily of the view that there's recession or doom coming...but that being said, you could still see some positive returns but a little bit more muted."
Whereas past market weakness presented buying opportunities, Greenberg said market strength could be an opportunity to sell and pocket some gains.
In New York, the Dow Jones industrial average was up 211.22 points at 25,928.68. The S&P 500 index was up 18.96 points at 2,834.40, while the Nasdaq composite was up 60.16 points at 7,729.32.
U.S. markets rose on renewed optimism about trade talks between the United States and China after Treasury Secretary Steven Mnuchin said he had a "productive working dinner" with Chinese trade officials and that China made proposals that went further than it had in the past.
