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Canadian stocks in Canada rallied by 4.7% in October, the best monthly gain in 3½ years! Banks lead the way higher, gaining 6.5%, as fears about a housing slowdown in Canada dissipated. Rails stocks lead the Industrials sector higher as stronger economic growth and continued cost cutting helped both CP and CN Rail beat earnings expectations. The Technology sector was the only one to fall as CGI Group was hurt by their involvement in the Obamacare launch issues. Gold stocks also held back the index on late month weakness in commodity prices. U.S. markets were also higher on reasonable earnings releases while European indices continued their recent recovery.
October started off slowly, losing ground in the first week, but stocks have rallied again following end of the U.S. government shutdown. While the data releases since then have been spotty and weak (due in some part to delays in data collection when government employees were out), stock investors have seized on this by assuming that the fears about the tapering of government bond purchases (quantitative easing) would now be delayed into 2014. In a sense, stocks are at a point where ‘good news is bad news and bad news is bad news.’ (more…)