Investors week to build on strong gains as bull market enters its sixth year

TORONTO - Stock markets will be looking to build on the strong gains racked up so far this year amid little in the way of economic data coming out during the week and a notable anniversary for indexes.

The bull market is now entering its sixth year, Sunday being the fifth anniversary of when the equity markets finally hit bottom after the 2008 financial crisis sent stock prices crashing and sparked a recession.

The TSX has surged 89 per cent since Mar. 9, 2009, while the Dow industrials have powered ahead 150 per cent. The New York blue chip index racked up a 27 per cent advance in 2013 alone, thanks in large part to massive amounts of stimulus from the U.S. Federal Reserve.

The New York markets have gone on to chalk up one record level after another in the last year but the TSX is still about 800 points away from its all time high of 15,073 from the middle of 2008 before the bottom fell out.

Many analysts say they just don't see anything that could derail the rally just yet.

"There’s a lot of things telling me this market can continue to chug along in the right direction," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.

"We’re sticking (to) overweight on equities, being overweight on the foreign part of the markets both on the equities and the bond side."

The only fly in the ointment, according to some traders, is that it's been a good two years since there was a meaningful correction on U.S. markets. There was a minor dip of around five per cent in January but investors quickly bought into the dip.

The TSX ran ahead 0.62 per cent this past week while the Dow industrials rose 0.8 per cent.

The markets are starting the week off with a strong tailwind: Friday's U.S. non-farm payrolls report had job creation coming in at a better than expected 175,000 jobs, while the previous two months were revised upward. The showing reinforced the sentiment that economic weakness seen in a variety of recent reports is largely related to severe winter weather that smacked large parts of the United States.

Traders will also keep an eye on the Ukraine-Russia crisis this week.

Analysts have expressed some surprise at how quickly markets rebounded last week after initially selling off in the wake of Russia's invasion of Ukraine's Crimea peninsula, where it has major military installations and many people are Russian speaking.

"It is rather astonishing," said Doug Porter, chief economist at BMO Capital Markets.

"I’m somewhat surprised at how long it took for the market to really pay attention to it. And then how quickly it came and went."

But Porter is concerned there could be some more unwelcome surprises from the crisis, the worst since the end of the Cold War.

"I guess because of the unknown, the markets are largely discounting the potential negatives there. But I don’t believe this issue has completely gone away."

It's a very thin week for economic data. The major U.S. report of the week — retail sales for February — comes out Thursday. But Porter thinks the numbers will likely be distorted somewhat by the weather.

"There won’t be high expectations for that report and I don’t think it’s until we see the March numbers that people will be expecting a clean read on the U.S. economic data."

In Canada, investors will consider the reading on housing starts for February but that too will have winter going against it.

"February starts would be weather affected, whatever the number is, and I wouldn’t read too much into it," said Porter.