Canadian stock prices rallied after hitting a five-week low, with telephone companies making the largest gains in two weeks.
Canadian stock prices rallied after hitting a five-week low, with telephone companies making the largest gains in two weeks. This positive news followed the naming of Janet L. Yellen as the next U.S. Federal Reserve Chairwoman and talk that she will employ a similar strategy to the man she will be replacing, Ben S. Bernanke.
BCE Inc. and TELUS Corp. both gained upwards of 1.4 percent yesterday, as phone stock prices made a fourth consecutive daily increase. Amid reports that it had settled legal issues with BlackBerry Ltd., Wi-Lan Inc. improved by 1 percent yesterday. On the other hand, Pretium Resources Inc. dropped a hefty 31 percent following significant organizational changes, and Jean Coutu Group PJC Inc. fell 4.2 percent after the company’s financials failed to meet analyst expectations.
In all, the Standard & Poor’s/TSX Composite Index rallied by 0.3 percent, or 37.92 points to 12,730.33 as of 4 p.m. yesterday. For the year, the S&P/TSX index is up 2.4 percent.
What we’re seeing today and all week is quite a bit of volatility and sensitivity to news headlines in the U.S.,” said Stenner Investment Partners of Richardson GMP Ltd. portfolio manager Youssef Zohny. “There’s a little more certainty on the direction of monetary policy now that we know who’s going to be in charge and more details from the minutes. The market is responding well to that,” he posited.
Zohny oversees approximately C$ 16 billion, or $15.4 billion USD for his firm. Most experts believe Yellen will remain consistent with Bernanke in terms of pushing for a continued bond-buying economic stimulus, which has served as a fillip for the equity market since launching last year.
Economists nonetheless remained concerned about the U.S. government shutdown, which has been ongoing since October 1. The stalemate resulted from a lack of agreement between house Democrats and Republicans regarding a number of issues, and both sides are nowhere close to a compromise, as President Barack Obama and House Speaker John Boehner remain divided on these issues, particularly those pertaining to the President’s healthcare policy.
According to Toronto-based fund manager John Kinsey of Caldwell Securities Ltd., the longer the impasse last, “the more bargains there will be” in the stock market. Other experts see an extended shutdown as a harbinger of another global economic recession and a precursor for catastrophic effects to many of the world’s stock markets.
Going back to the Canadian stock market, eight out of the ten industries in the S&P/TSX basket rallied in yesterday’s trading, as telephone stocks gained by 1.5 percent. BCE, as mentioned above, added another 2.2 percent to C$44.70 per share, while TELUS stock was up by 1.4 percent to C$34.39. Also, Rogers Communications Inc. added 0.9 percent to settle at C$45.18 per share. Trading volume overall was 9.3 percent lower than the running average for the past month.
Interesting news that affected telephone stock prices included the Canadian government’s rejection of Manitoba Telecom Services Inc.’s intended agreement with Accelero Capital Holdings Sarl Group, a deal wherein the former company would sell its Allstream division to the latter for C$ 520 million. The sale, according to reports, was rejected on October 7 as a result of national security concerns.