TORONTO 鈥� A broad-based rally pushed Canada's main stock index up by almost 500 points Tuesday, in a continued strong start to the final quarter of the year buoyed by hopes that central banks鈥� rate hikes are having their intended effect.
The S&P/TSX composite index closed up 489.80 points, or 2.6 per cent, at 19,370.99.
That means markets were up for the first two days of the fourth quarter of 2022, after a difficult start to the fall.聽
September is normally the weakest month of the year, said Sid Mokhtari, CIBC's Executive Director of Institutional Equity Research, while October is one of the most volatile.
鈥淚t is very well known for its major drawdowns, as well as surprises on the upside,鈥� he said. 鈥淪o it's a month that we need to approach with a lot of care.鈥�
The U.S. midterm elections coming up may also result in more market volatility, said Mokhtari.聽
In New York, the Dow Jones industrial average was up 825.43 points, or 2.8 per cent, at 30,316.32. The S&P 500 index was up 112.5 points, or 3.1 per cent, at 3,790.93, while the Nasdaq composite was up 360.97 points, or 3.3 per cent, at 11,176.41.
"The price action that we're getting, it's not a surprise, given some of the work that we've done coming into October," said Mokhtari. "The backdrop of the market was extremely oversold, very similar to what we had in the summer lows."
Australia's central bank announced a smaller rate hike than anticipated Tuesday, noted Mokhtari, perhaps a sign of things to come.聽
"Sentiment readings are extremely bearish, or very similar to what we recorded in 2008," he said, adding that investors are currently preoccupied with protection against risk.聽
"In other words, investors are putting on a lot of hedge on the downside."
Investors are waiting for U.S. nonfarm payroll data, which comes out on Friday, with hopes that weaker numbers will signal the effects of rate hikes coming through, said Mokhtari.
鈥淏ad news may actually be good news for the market,鈥� he said.
鈥淚f the job numbers are potentially weaker, it may add more fuel or buoyancy to the market.鈥�
U.S. job openings data released Tuesday showed that the number of available jobs in August dropped ten per cent compared to July.聽
The Canadian dollar traded for 73.67 cents US compared with 73.20 cents US on Monday.
The November crude contract was up US$2.89 at US$86.52 per barrel and the November natural gas contract was up 37 cents at US$6.84 per mmBTU.
The December gold contract was up US$28.50 at US$1,730.50 an ounce and the December copper contract was up eight cents at US$3.49 a pound.
Mokhtari said this year's tax-loss harvesting is probably at the highest level since 2008, which could pose challenges as the market attempts to recover.聽
This report by The Canadian Press was first published Oct. 4, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press
