Canada’s main stock index got a lift from the heavyweight financials sector after the first bank to report this quarter beat expectations, while U.S. markets hit their highest levels in more than two months.
The S&P/TSX composite index closed up 72.70 points, or 0.48%, at 15,148.12. Financials rose 5.21%, led by a 7.41% jump in Bank of Nova Scotia shares after a solid earnings beat.
Royal Bank of Canada rose 6.19% to $88.03 on the TSX, giving it a market cap of $125.352 billion. But it still wasn’t quite enough to topple Shopify as Canada’s most valued company, even after an 11% drop Tuesday left it with a market cap of $126.243 billion.
The was no apparent news accounting for the drop in Shopify shares. The Wall Street Journal Tuesday did, however, publish a largely favourable ‘Heard on the Street’ column on the Canadian company. “A temporary pullback in shares is likely warranted, but the longer term bull case remains,” the column read, concluding, “More than a pandemic winner, at the intersection of consumer, technology and fintech, its shares may be a future staple.”
Materials had a weak day on the TSX as gold prices fell, with that sector losing 4.42%.
In New York, the Dow Jones industrial average was up 529.95 points or 2.2 per cent at 24,995.11. The S&P 500 index was up 36.32 points at 2,991.77, while the Nasdaq composite was up 15.63 points at 9,340.22.
Wall Street, which was closed for a holiday Monday when the TSX posted solid gains, rose Tuesday on optimism about developing coronavirus vaccines and the revival of business activity. But the S&P 500 failed to hold above the key psychological level of 3,000 points.
Stocks pared gains late in the session, after Bloomberg News reported the Trump administration was weighing a range of sanctions on Chinese officials, businesses and financial institutions, reinforcing comments earlier in the day from White House adviser Larry Kudlow.
Kudlow said President Donald Trump was “so miffed with China on virus and other matters that the trade deal is not as important to him as it once was.”
The benchmark S&P 500 had crossed 3,000 for the first time since March 5 before dropping back.
The S&P 500 has risen about 37% from its March 23 low on central bank and government stimulus at a time when the U.S. economy is seeing its biggest job losses since the Great Depression of the 1930s. It is now about 11% below its February record high.
On Monday, California, which has had one of the country’s most restrictive shutdowns, said it would allow retail businesses to offer in-store shopping and places of worship to reopen.
On top of vaccine-related news, Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, pointed to better-than-expected home sales data and comments from JPMorgan Chase CEO Jamie Dimon.
“When you add the news all together everyone’s getting a boost,” Snyder said.
Data showed U.S. consumer confidence nudged up in May, adding to hopes that the worst of the economic impact of the shutdown is in the past.
U.S. biotech group Novavax Inc soared as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants. Merck & Co Inc advanced after it announced plans to develop two separate vaccines.
While macroeconomic data was pointing at a deep recession, Citi’s Snyder was focused on the recovery. But he questioned how much further the market would rise with the U.S. presidential election in November and simmering U.S.-China tensions.
“The returns from here will be harder to come by,” he said.
Beaten-down travel-related stocks climbed including the S&P 1500 airlines stocks index and cruise operators including Carnival Corp.
The New York Stock Exchange on Tuesday partially reopened its trading floors at the iconic 11 Wall Street building, which had been closed since March 23.
With files from Reuters and The Canadian Press
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Darcy Keith