Canada’s main stock index rose on Monday, benefiting from a broadening of the recent rally to include stocks considered cheap compared to their fundamental valuations, although gains were restrained ahead of a key U.S. inflation report. The S&P 500 ended slightly lower while bitcoin continued to attract considerable attention, rallying to another record high.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 31.69 points, or 0.2%, at 21,769.22 but stopping short of the near two-year high it notched on Thursday at 21,794.56.
“That broader uptrade persists but today we are seeing some indecision ahead of the U.S. CPI report,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
The U.S. consumer price index report for February, due on Tuesday, could help guide expectations for the start of Federal Reserve interest rate cuts. Expectations are for a monthly increase of 0.4% and 3.1% on an annual basis.
“One of the most important developments in the last couple of days has been this rotation across different styles and sectors ... moving money out of tech into areas like value style investments,” Kourkafas said.
The TSX has a heavy concentration of value stocks, including companies in the financial, industrial and material sectors, that tend to trade at a cheaper price than their expected cash flows would suggest.
The materials index, which includes precious and base metals miners and fertilizer companies, rose 0.8% as gold continued its record-setting rally. It was led by a gain of 10.2% for Silvercrest Metals Inc after the non-gold precious metals miner announced its fourth-quarter results.
Financials also gained ground, rising 0.3%, and energy was up 0.2% despite the price of oil settling 0.1% lower at $77.93 a barrel.
Technology was a drag, falling 0.5%. Still, the sector is up 6% since the start of the year.
In the U.S., Boeing shares eased 3%. U.S. Transportation Secretary Pete Buttigieg said on Monday he expects the planemaker to cooperate in investigations by the Justice Department and National Transportation Safety Board into the Alaska Airlines 737 MAX 9 mid-air emergency on Jan. 5.
The Dow Jones Industrial Average rose 46.97 points, or 0.12%, to 38,769.66, the S&P 500 lost 5.75 points, or 0.11%, to 5,117.94 and the Nasdaq Composite dropped 65.84 points, or 0.41%, to 16,019.27.
Chip stocks extended recent declines, with Nvidia ending down 2%, Advanced Micro Devices falling 4.3% and Broadcom declining 1.2%.
Shares of Equitrans Midstream edged up 1.5% after EQT Corp said on Monday it had decided to buy back its former unit in an all-stock deal. EQT shares slid 7.8%.
Volume on U.S. exchanges was 10.90 billion shares, compared with the 12.06 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.45-to-1 ratio favored decliners. The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 53 new highs and 74 new lows.
Meanwhile, bitcoin rose above US$72,000, a gain of more than 4%, as the biggest cryptocurrency’s surge showed no signs of slowing down.
The world’s most valuable cryptocurrency has been boosted by a flood of cash into new spot bitcoin exchange-traded funds and hopes that the Federal Reserve will soon cut interest rates.
Flows of capital into the 10 largest U.S. spot bitcoin exchange-traded funds slowed to a two-week low in the week to March 8, but still reached almost $2 billion, LSEG data showed.
“Bitcoin has started the week with a surge, dragging the rest of the cryptocurrency space higher with it,” DailyFX strategist Nick Cawley said.
Supply of bitcoin, which is limited to 21 million tokens, is set to get tighter in April, when the so-called “halving” event takes place.
Every four years, the rate at which new supply is released into circulation, as well as the reward for crypto miners, is halved, which tends to support the price.
Since bitcoin has less than two decades as a financial asset, predicting its price trajectory remains extremely challenging. Just months after retail exuberance helped drive bitcoin to its previous record in November 2021 the cryptocurrency crashed, taking half the crypto industry with it.
Britain’s financial watchdog on Monday became the latest regulator to pave the way for digital asset trading products after saying on Monday it will now permit recognized investment exchanges to launch crypto-backed exchange-traded notes.
The UK regulator said these products would be only available for professional investors such as investment firms and credit institutions authorised to operate in financial markets, the Financial Conduct Authority (FCA) said in a statement.
The FCA warned that crypto exchange traded notes (ETNs) - bonds issued by financial institutions that track the performance of underlying assets - could harm retail investors.
Nonetheless, demand is picking up across the investment community.
Asset managers now hold the biggest bullish position in bitcoin futures on record, weekly data from the U.S. Commodity Futures Trading Commission showed.
In the week to March 5, the net long position held by asset managers - usually interpreted as covering holdings of institutional investors such as mutual funds and pension funds - rose to 15,531 lots, worth $5.5 billion based on the current bitcoin price.
Ether rose 3.97% to $4,062.07, around its highest for two years. Speculation that U.S. regulators may approve the listing of spot ether ETFs this year has driven the price up 75% this year.
In crypto stocks, shares of Coinbase rose 2.8%, while crypto miners Riot Platforms and Marathon Digital fell 2.2% and 6.1%, respectively.
Reuters, Globe staff