The main Canadian stock index closed slightly lower on Thursday, ending a five-day streak of straight “Santa Gathering” wins.
The S & P / TSX Composite Index lost 50.01 points to 21,294.64, ending a streak of holiday season gains, but still closing more than 600 points higher than at the start of the month .
Historically, the stock markets have tended to rise during the last week of December and the first days of the new year, giving rise to the term “Santa’s Gathering”.
But Mona Mahajan, senior investment strategist for Edward Jones, said it was remarkable that North American markets went through the end of December so strong this year, given the headwinds they faced.
“This market has managed to climb some big walls of concern. Number one, obviously, is that we have seen this notable increase in virus cases caused by Omicron, ”Mahajan said, noting that investors seem increasingly confident that this latest wave of COVID-19 will not do the same. kind of wreak havoc on the economy than previous waves.
Additionally, Mahajan said the market surged even amid the likelihood of a U.S. Federal Reserve rate hike in 2022.
“I think the Bank of Canada is on a similar rate hike path at the start of the new year, or at least the first half of the year. So I think it’s interesting that the markets are still able to go through the Santa Claus rally, ”she said.
“Sure, there were low volumes (of trading) as people headed for the holidays, but nonetheless, we’re pretty well prepared to end the year with solid double-digit gains.”
In New York, the Dow Jones Industrial Index lost 90.55 points to 36,398.08. The S&P 500 was down 14.33 points to 4,778.73, while the Nasdaq composite was down 24.66 points to 15,741.56.
The Canadian dollar was trading at 78.27 cents US against 78.10 on December 29.
The February crude contract rose 43 cents to US $ 76.61 per barrel, and the February natural gas contract fell 26 cents to $ 3.44 per mmBTU.
The February gold contract was up US $ 8.30 to US $ 1,814.10 an ounce and the March copper contract was down two cents to US $ 4.39 per pound.
There is still a lot of liquidity in the market due to central bank stocks, Mahajan said, and investors tend to like stocks during times of inflation because they typically outperform the rate of inflation.
Still, she said that by 2022, investors should be prepared for things to stabilize somewhat.
“Usually our view is that we will get moderate profits and economic growth, moderate inflation – which can be a good thing – and certainly moderation of fiscal policy support,” she said. “And from a market perspective, we think we’ll get moderate returns.”
That doesn’t mean investors need to panic, Mahajan said, but the more than 20% gains recorded this year by the S & P / TSX Composite Index are unlikely to be repeated in 2022.
“We definitely recommend investors to stay invested, just keep in mind that there will be more volatility and the return profiles will be different from what we have seen this year,” she said.
This report by The Canadian Press was first published on December 29, 2021.
Companies in this story: (TSX: GSPTSE, TSX: CADUSD = X)