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The Toronto stock market advanced Monday afternoon after solid manufacturing data from the U.S. and China sent commodity prices higher.
The S&P/TSX composite index was off early highs as losses mounted in the telecom and tech sectors on the first trading day of 2010. But the main index was still ahead 76.8 points to 11,822.9 as the Institute for Supply Management’s U.S. manufacturing index rose to a better-than-expected 55.9 last month from 53.6 in November.
A figure above 50 indicates expansion and the bigger the difference, the faster the expansion.
Other data showed China’s manufacturing sector expanded at its fastest rate in 20 months in December.
The monthly purchasing managers’ index – a key gauge of activity – for the 16 countries that use the euro rose to a 21-month high of 51.6, while the equivalent survey for Britain rose to a 25-month high of 54.1.
“I think you have all the pieces,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
“The news is better than expected on the economy and certainly in the U.S. and China, which are both global growth drivers. And I think that’s what everybody is watching, so we have commodities higher and no surprise the TSX is up as well.”
The Canadian dollar jumped 0.99 of a cent to 96.14 cents US – its highest level since mid-October – as the data pushed the American currency lower.
The economic reports follow an impressive end to the 2009 trading year that saw the main Toronto index up 31 per cent – its best one-year gain since 1979. The Dow Jones industrials ran ahead 19 per cent, the tech-heavy Nasdaq 44 per cent and the S&P 500 index jumped 23 per cent as investors hope a solid economic recovery is taking place.
How much credence should we give to credit rating agencies?
Roger S. Conrad, leading adviser on essential services stocks, bonds and preferred stocks answers the question on how much credence should we give credit rating agencies like Standard & Poor’s, Moody’s and Fitch after the recent financial crisis? After all, these are the very same credit raters that “misjudged the risk to the financial system before the crash. Their biggest mistake, obviously, was underestimating the risks from mortgage-backed securities, for which at one time they were handing out AAA ratings on like candy’.
He goes on providing more examples, “Worse, this is hardly the first time they’ve completely missed the boat on a major industry meltdown. Back in 2001, for example, S&P rated Enron investment-grade the day that company filed for Chapter 11 bankruptcy. WorldCom also held high ratings right up until it wiped out its stockholders”.
According to Conrad, “the worst time to look at credit rater research is when an industry has been strong for a long time.”
And the best?
Read the whole article at the link below:
www.kciinvesting.com