TSX touches 9-month high on U.S. budget deal

Wed Jan 2, 2013 5:03pm EST
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By Allison Martell

TORONTO (Reuters) - Canada's main stock index rose in the year's first trading session on Wednesday, touching a nine-month high, as commodities rallied on a deal to resolve the high-stakes U.S. budget crisis.

The U.S. averted possible economic calamity when lawmakers approved a deal late on Tuesday to avoid a "fiscal cliff" of tax hikes and spending cuts that had threatened to tip the world's largest economy into recession.

"It is good to see the TSX get off to a fairly decent start, but it's not been anywhere near as strong as the rally in the U.S., which is not really surprising," said Elvis Picardo, strategist at Global Securities in Vancouver.

Picardo said the U.S. budget deal only addresses one of several issues that have been holding back the Canadian market, such as signs the domestic economy has slowed and worries about the housing market.

Even so, all 10 main sectors advanced. The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 107.24 points, or 0.86 percent, at 12,540.77, after earlier reaching 12,588.75, its highest since March 27, 2012.

"It's a matter of hope and confidence that all this stuff that's been overhanging the market over the last number of weeks can be put to rest now, and we can see if we can find something else to worry about," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

"There's a little more confidence and a little more comfort in the minds of investors," he said.

The materials sector, home to mining companies, was the biggest boost to the index, rising 1.8 percent. The Thomson Reuters-Jefferies CRB Index .TRJCRB, which tracks commodity prices, rose 0.9 percent.   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch