Canada stocks seen adding to rally in 2017: Reuters poll

Tue Oct 4, 2016 10:31am EDT
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By Fergal Smith

TORONTO (Reuters) - Canada's main stock index is expected to extend this year's hefty gains in 2017, a Reuters poll found, although stock market strategists said they are concerned about the outcome of the U.S. election and potential threats to global trade.

The Toronto S&P/TSX composite index .GSPTSE has rallied nearly 28 percent since hitting a three-year low in January as the price of oil, a key Canadian export, partially recovered.

But the TSX has traded mostly sideways since August, as investors weighed the risk of a Federal Reserve interest rate hike before year end, now most likely in December, and as the U.S. presidential election race has tightened in the polls.

"I worry the markets have totally mispriced political risk in the U.S.," said Colin Cieszynski, senior market analyst at CMC Markets Canada. He expects Canadian stocks to reach 14,750 by year end and 16,000 by end-2017.

A win for Republican U.S. presidential candidate Donald Trump would add to protectionism concerns which threaten global trade, Cieszynski added.

Trump has said he would renegotiate or scrap the North American Free Trade Agreement if he is elected.

The median forecast from the Reuters poll of 25 strategists was for the TSX index to rise to 14,900 by the end of 2016, up over 1 percent from Monday's close of 14,689.04 and 15 percent above the 13,009.95 where it ended last year.

It fell just over 11 percent in 2015.   Continued...

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. Canada's main stock index was little changed on Monday as weakness in financial and energy shares offset gains in the materials sector.   REUTERS/Mark Blinch