Wednesday, August 20th24.7°C
22938

Markets expect tepid start to week

Stock markets will likely be in for quiet trading at the beginning of this week with traders cautious ahead of the U.S. election on Tuesday that is too close to call.

"It's a huge week on the political scene," said Colin Cieszynski, market analyst at CMC Markets Canada, who observed that China will also be in focus. The Communist Party's 18th Party Congress meeting kicks off on Thursday, which will see the leadership transition of the Party and also the country.

The Toronto markets chalked up a rise of 0.65 per cent last week in the wake of positive Canadian earnings reports. New York markets were slightly lower despite strong U.S. economic data, including consumer confidence at the best level in almost five years, and data showing expansion in the U.S. and Chinese manufacturing sectors.

The week was capped by a stronger than expected U.S. employment report for October as the American economy cranked out 170,000 jobs last month, higher than the 125,000 that had been expected, although the unemployment rate inched up 0.1 of a point to 7.9 per cent.

The U.S. numbers for August and September were also revised upward to show an additional 84,000 jobs were created, but election jitters kept markets muted.

"Obviously (the election) is very much up in the air very close, anyone's guess is as good as any others, said Robert Gorman, chief portfolio strategist at TD Waterhouse.

"So we've had a lot of anxiety surrounding this and people don't know which way to turn at this stage of the game and they're sitting tight."

Regardless of the outcome of the election, there is a growing amount of uncertainty over the so-called fiscal cliff facing the U.S. economy.

The "fiscal cliff" refers to a variety of tax hikes and massive budget reductions that will come into effect at the end of December unless Republicans and Democrats can come together with an alternative budget plan. Economists warn such a shock could send the economy back into recession.

International Monetary Fund chief Christine Lagarde recently warned that Canada would not escape the fallout from that.

And the worry is that negotiations to get around this hurdle would be frozen in the absence of a clear winner of the presidential contest.

"It's not what anyone needs at this stage of the game," said Gorman.

"I think in some respects, people are kind of girding themselves for what might be another really very, very tight, hotly contested and difficult election, not just in terms of winner/loser but lack of clarity here."

And it's not as though the American business community doesn't have enough uncertainty from the political climate.

"If you speak to groups of business people they'll tell you time in, time out that I don't know what my tax rate is going to be, I don't know what my health care costs are going to be," said Gorman.

He noted that partly because of the climate of uncertainty, corporations have been able to use strong earnings to build up large cash reserves.

"The glass half full (side of the argument) is that there is a lot of cash to spend, corporate balance sheets are extraordinarily good, and the firepower they have in the form of all that cash probably exceeds whatever the Fed can throw at it. If that uncertainty diminishes, that could lend a major, major pop to the U.S. and for that matter Canadian economies."

Gorman also observed that the post-election period has generally been positive for the U.S. stock market.

But "it may be a little more problematic because this time around, with the whole fiscal cliff debate emerging as a major, major topic of discussion, I think attention may shift to that. I think the jury may be out," he said.

"Longer term, I think we will be OK, but we're going to have a of drama surrounding that discussion."

The Canadian Press


Read more Business News

22870


Recent Trending




Today's Market
S&P TSX15561.95+84.78
S&P CDNX996.70-0.86
DJIA16979.1359.54
Nasdaq4526.482-1.032
S&P 5001986.51+4.91
CDN Dollar0.9107-0.0008
Gold1290.00-3.40
Oil96.30+1.82
Lumber356.30+1.30
Natural Gas3.85+0.027

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.21+0.01
Cantex0.065-0.005
Anavex Life Sciences0.260.00
Metalex Ventures0.0850.00
Russel Metals37.45+0.23
Copper Mountain Mining2.92+0.15
Colorado Resources0.185+0.015
ReliaBrand Inc0.085+0.008
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.23+0.03

 



22870

FEATURED Property
2050840102 & 203 - 945 Lawrence Ave
$215,800
more details
image2image2image2
Click here to feature your property
Please wait... loading


Cost of an Injury Lawyer

Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your cla...


Going home to a bully!

Finally, after three months in New Brunswick, I am back home in the sunny Okanagan. It is a delight to be home and the lake, vistas, people and climate never disappoint. Like many people however, I...


Managing a business in 40 hours a week

My screen printing business, like many others, started as a one-man operation. It was located in a small building, not much better than a shack, with a telephone, a big table where I ate lunch and (oc...

_





22854


Member of BC Press Council


22771