TSX ends 2009 trading higher, surging 31 per cent for the year; N.Y. closes lower

The Canadian Press ~ The News
Send to a friend

Send this article to a friend.

TORONTO - The Toronto stock market climbed modestly Thursday as the TSX wound up 2009 trading with one of its biggest annual gains in more than a quarter century.
The S&P/TSX composite index rose 28.65 points to 11,746.11 to end '09 slightly off its best levels for the year - 11,779.73 from early this month. But investors can look back with satisfaction on a year of strong gains on the main North American indexes.
A rally that has run practically non-stop since early March took the TSX up about 31 per cent for 2009, its best one-year gain since 1983. The main index is up a stunning 54 per cent from the lows of early March, when investors feared that the global financial system was on the verge of collapse.
"People were very scared and questioning the overall integrity of the financial system, so no one was even thinking about stellar returns," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
"We were thinking about how safe is our money, even under the mattress."
The Dow Jones industrial average is about 19 per cent for the year, the technology-heavy Nasdaq composite index is up 44 per cent and the broad-based S&P 500 index has ran ahead about 23 per cent.
Impressive as the strong TSX performance looks, it follows a 35 per cent loss in 2008 and the main TSX index level at around 11,700 is still a long way from the 15,073 mark, the all-time peak hit in the middle of that year. That was before the global financial crisis and credit crunch battered world stock prices and produced the recession.
The Canadian dollar climbed 0.39 of a cent Thursday to 95.15 cents US, a sharp rise from the 82.1-cent level where it started 2009.
The loonie started gaining traction in early March, around the same time stock markets hit their lows for the year, and has been on a steady rise since then amid sharply higher commodity prices and a steadily weakening U.S. dollar. Economists expect the dollar to revisit parity with the greenback during 2010.
Toronto's telecom sector saw the smallest gain for the year, while base metals led the way with a huge 316 per cent climb.
Analysts point out that the weak showing in telecom wasn't unique to Canada.
"Some of it is competition in Canada, but the U.S. telecom sector also hasn't done well (and) there are concerns about the industry worldwide," said Duncan Stewart, director of research and analysis at DSAM Consulting.
"I'd say the Canadian underperformance is 20 per cent Canadian-specific and 80 per cent global industry factors."
Competitive pressure heated up in December when new wireless player Globalive Wireless Management Corp. was given the green light by the federal government to enter the Canadian market.
The move reversed an earlier decision by the Canadian Radio-Television Telecommunications Commission and will create a fourth wireless company in Canada.
The base metals sector had two big reasons for its surge - copper prices more than doubled during 2009 to above US$3.30 a pound as demand, particularly from Asia, picked up.
And sector heavyweight Teck Resources (TSX:TCK.B) came back from a near-death experience, its stock falling as low as $3.35 during the year after the mining company took on US$9.8 billion in debt in the fall of 2008 when it bought Fording Canadian Coal Trust.
"So that priced in bankruptcy, basically," said Colin Cieszynski, market analyst at CMC Markets Canada.
"It's a big weight and when people start pricing in bankruptcy risk, (it) certainly dragged everything down a lot more."
But by the end of the year, Teck was trading around the $37 mark - up a staggering 1,000 per cent from its lows - pushed ahead by higher commodity prices and its announcement in October that it is paying off its once massive debt load quicker than planned.
The energy sector is ahead about 37 per cent for the year amid oil prices that more than doubled from the US$33.98 level in early February. At year end, the February crude contract on the New York Mercantile Exchange was up eight cents to US$79.36 a barrel.
The gold sector rose just over seven per cent for the year, even as gold surged from around US$884 an ounce at the start of the year to close Thursday at US$1,096.20 an ounce. Bullion went as high as US$1,212 in December as investors worried about the potential effect on inflation from massive government borrowing to finance stimulus spending.
The financial sector also had a good year, up about 38 per cent as a string of writeoffs connected with the imploding U.S. mortgage market tapered off, as did provisions for loan losses.
The information technology sector moved ahead about 53 per cent, mainly powered by a big swing in the shares of sector heavyweight Research In Motion Ltd. (TSX:RIM). The stock hit a low of $45.56 during the year, partly because of competition from Apple's iPhone. But at the end of the year the stock traded around the $71 level following a better-than-expected quarterly earnings report and a solid outlook.
The TSX Venture Exchange was up 28.22 points to 1,521.11 as rising commodity stocks took the small cap market up 90 per cent during this year.
New York markets were lower Thursday despite better-than-expected employment data which showed that the number of newly laid-off workers filing claims for unemployment benefits dropped unexpectedly last week, a sign the job market is healing as the economy slowly recovers.
The employment report made some investors uneasy, reminding them that as the economy improves, the government will pull back on the stimulus programs that have supported the recovery this year. While traders know it's inevitable that those measures will end at some point, they're uncertain about the economy's ability to thrive without them.
The Dow Jones industrial average was hit with a wave of profit-taking in the final hour, dropping 120.46 points to 10,428.05.
The Nasdaq composite index stepped back 22.13 points to 2,269.15 while the S&P 500 index slipped 11.32 points to 1,115.1.
Many investors were away for the holidays and trading volume was light.

Organizations: TSX, S&P, Dow Jones industrial average North American DSAM Consulting Globalive Wireless Management Canadian Radio-Television Telecommunications Commission Research In Motion Ltd. Fording Canadian Coal Trust CMC Markets Canada New York Mercantile Exchange Apple

Geographic location: New York, TORONTO, U.S. Canada MacTier Asia

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page