TSX investors getting vertigo
TORONTO (Reuters) - Rising profits at Canada's biggest companies may not be enough to shake the Toronto stock market free of the vertigo that has accompanied its rapid recent rise to two-year highs.
Fuelled by rallying commodity prices and the prospect that the US Federal Reserve will put up extra economic stimulus, the Toronto Stock Exchange's S&P/TSX composite index last week hit its highest level since the collapse of Lehman Brothers.
Some hope the imminent earnings season, which should include banner results for gold miners, will validate and extend a rally that some fear has brought the market too far, too fast. Many veteran market watchers, however, are wary.
"This one, and the next quarter, are going to be really important. But this one especially so because the stock market has done so well in the third quarter," said Patrick McHugh, a senior portfolio manager for Canadian large-cap stocks at MFC Global Investment Management.
"There's still a lot of scare and uncertainty in the marketplace. If companies don't excite investors with what they report or what they have to say, we may see people take money off the table."
The S&P/TSX composite index rallied nearly 10 percent in the third quarter, and is up almost another 2 percent so far in the month of October — a historically treacherous month.
It closed on Friday at 12,609.07, still a far cry from its pre-financial crisis peak at 15,154.77.
Companies in the exchange's blue-chip S&P/TSX 60 index are expecting aggregate earnings growth of 1.5 percent in third-quarter earnings per share compared with last year, according to Thomson Reuters StarMine SmartEstimates.