TORONTO — North American markets were flat on a low volume trading day to close off the week, with one analyst said investors are waiting for a sense of direction.
Allan Small, senior investment advisor with IA Private Wealth, said the current situation with rising COVID-19 cases has left a feeling of uncertainty around which direction central banks will take around interest rate changes or tapering stimulus.
“There really doesn’t seem to be any leading indicator or direction for the market today,” said Small, who said increases in equities over the past week have simply been because upward is the path of least resistance in the current environment.
In New York, the Dow Jones industrial average was up 15.53 points at 35,515.38. The S&P 500 index was up 7.17 points at 4,468.00, while the Nasdaq composite was up 6.64 points at 14,822.90.
The S&P/TSX composite index was down 2.53 points at 20,518.07.
In Toronto, rising precious metal prices saved Canada’s main stock exchange from having a worse day.
The December gold contract was up US$26.40 at US$1,782.40 an ounce and the September copper contract was up 3.1 cents at US$4.39 a pound. The TSX’s gold index was up 1.77 per cent and it’s materials index was up 1.38 per cent as a result.
The energy sector lagged on the TSX Friday, with that subindex down 1.4 per cent. The September crude oil contract was down 65 cents at US$68.44 per barrel and the September natural gas contract was down 7.2 cents at US$3.86 per mmBTU.
Looking ahead, Canadian inflation numbers that are set to come out next Wednesday could begin to give the market a reason to move one way or another.
Small also said an upcoming election could also have an impact, but said movement would likely be based on whether the Liberal government claims a majority or not, rather than the campaign itself. Prime Minister Justin Trudeau is expected to trigger an election on Sunday by asking Gov. Gen. Mary Simon to dissolve Parliament.
“It could affect our dollar and interest rates going forward,” said Small, who pointed out that in the meantime, August and September can be weak months in investing.
“I would not be surprised to see some softening in the markets in the coming weeks,” said Small.
That softness would be in spite of a strong season for second quarter reports, where many North American companies have met expectations without seeing substantial movements in their stock.
“Even though earnings were fantastic this past quarter, we’re at the top end for a lot of these corporations in terms of valuation,” said Small.
“It’s tough to buy them with these valuations and it’s tough to put money to work.”
This report by The Canadian Press was first published Aug. 13, 2021.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Salmaan Farooqui, The Canadian Press
