TORONTO -- Canada's main stock index inched higher midweek on strong U.S. corporate earnings and improved risk appetite despite ongoing threats from a new form of coronavirus.
"Today investors are largely looking past the coronavirus issues in China and are instead shifting their focus to fundamentals and particularly after some of the bellwether companies in the U.S. this morning reported stronger than expected earnings results," said Candice Bangsund, portfolio manager for Fiera Capital
Specifically she pointed to Apple Inc. and General Electric, whose shares gained 1.9 and 9.8 per cent respectively.
Pessimism and risk aversion is primarily reflected in bond markets with falling yields, the strengthened U.S. dollar and higher gold prices, she said.
"The fact that the underlying fundamentals are strengthening has largely outweighed the potential risks stemming from China, particularly seeing as these risks up until now any ways seem to be fairly contained to the Chinese economy," she said in an interview.
Markets were later supported Wednesday by the Federal Reserve, which in addition to not altering interest rates, conveyed a message of cautious optimism on the state of the economy, said Bangsund.
But she said corporate results were more important than the central bank comments, which is an encouraging development.
"When the market is moving on fundamentals like that and that's countering some of the geopolitical or uncertainty overseas, that helps to reignite confidence in general."
Bangsund said she expects near-term market volatility will continue and trade on headlines related to China including sporadic bouts of economic weakness, but the longer-term outlook is bright.
"When we look a few months out toward April-May we think we are going to be hitting some new highs again and markets will regain that momentum and will make new highs, just because the economic backdrop is so sound."
The S&P/TSX composite index closed up 10.87 points at 17,511.75 after hitting an intraday high of 17,561.87.
In New York, the Dow Jones industrial average was up 11.60 points at 28,734.45. The S&P 500 index was down 2.84 points at 3,273.40, while the Nasdaq composite was up 5.48 points at 9,275.16.
The Canadian dollar traded for 75.78 cents US compared with an average of 75.88 cents US on Tuesday.
The materials subsector was the largest gainer on the day helped by Kinross Gold Corp. and Centerra Gold Inc. climbing at least 4.3 per cent. They rose along with gold prices as investors continued to seek safety.
The February gold contract was up 60 cents at US$1.570.40 an ounce and the March copper contract was down 2.55 cents at US$2.55 a pound.
Industrials increased on a 1.4 per cent gain by CP Rail after it reported higher fourth-quarter profits, and Air Canada enjoyed a partial recovery after losing nearly 12 per cent since the outbreak of the coronavirus.
Energy was up led by Cenovus Energy Inc. Crude oil prices fell as the U.S. reported stronger weekly inventory levels.
The March crude contract was down 15 cents at US$53.33 per barrel and the March natural gas contract was down 4.3 cents at US$1.865 per mmBTU.
This report by The Canadian Press was first published Jan. 29, 2020
