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North American stock markets fall to end very strong November while loonie rises

TORONTO — Despite losing some ground to start the week, North American stock markets concluded an exceptionally strong month of November on the back of positive news about COVID-19 vaccines. The S&P/TSX composite index closed down 191.
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TORONTO — Despite losing some ground to start the week, North American stock markets concluded an exceptionally strong month of November on the back of positive news about COVID-19 vaccines. 

The S&P/TSX composite index closed down 191.13 points to 17,205.43, but was up more than 10 per cent for the month. 

In New York, the Dow Jones industrial average was down 271.73 points at 29,638.64. The S&P 500 index was down 16.72 points at 3,621.63, while the Nasdaq composite was down 7.11 points at 12,198.74 after setting a record high earlier in the trading session.

The three U.S. markets gained between 10.75 and 11.8 per cent in November.

The primary reasons for the recovery from weakness in September and October was investor optimism about vaccines and the fact that uncertainty about the U.S. election appears to have ended, said Pierre Cleroux, vice-president of research and chief economist for the Business Development Bank of Canada. 

"I think they believe the vaccine will help the economy to return to normal. So I think that's probably the main reason why November has been so good," he said in an interview.

The Dow surpassed 30,000 points last week for the first time, Nasdaq reached 12,244 on Monday and the TSX moved last Thursday to within three percentage points of the all-time high set in February.

Cleroux said the pace of the market recovery since the spring COVID-19 selloff was surprising.

"I don't think anybody in March thought that the market would come back so quickly," he said.

Cleroux expects more records will be broken in December if Americans start to be vaccinated during the month.

"December, I think, will be probably more volatile, but I'm confident that the market will stay high as news on the vaccine will, I believe, continue to be positive."

The Canadian dollar hit its highest level of the year and ended the month up two cents or 2.7 per cent. The loonie traded for 77.13 cents US compared with 77.01 cents US on Friday. 

The gain came as the U.S. dollar continued to fall on investor concerns about rising infection rates, said Cleroux.

The energy sector fell the most on the TSX, dropping 6.3 per cent as crude oil prices slid on indecision by OPEC over future supply.

Some OPEC partners would like to reduce crude supplies to support prices, but others contend there's no need to limit output, believing the economy is going to improve early next year, said Cleroux.

Shares of Crescent Point Energy Corp. and Vermilion Energy Inc. lost 9.7 and 8.3 per cent, respectively. Suncor Energy Inc. was down 7.3 per cent in heavy trading.

The January crude contract was down 19 cents at US$45.34 per barrel and the January natural gas contract was up 3.9 cents at US$2.88 per mmBTU. 

Nonetheless, crude oil prices surged 26.7 per cent in November on hopes that vaccines would facilitate a recovery in demand.

Financials, real estate, utilities and industrials were also lower.

The materials sector was the bigger climber on the day, gaining about a half of a percentage point despite a further drop in gold price as copper prices rose.

The February gold contract was down US$7.20 at US$1,780.90 an ounce and the March copper contract was up 2.05 cents at nearly US$3.44 a pound. 

Health care and technology were both higher, with shares of Shopify Inc. up 4.1 per cent.

This report by The Canadian Press was first published Nov. 30, 2020. 

Companies in this story: (TSX:SHOP, TSX:CPG, TSX:VET, TSX:SU, TSX:GSPTSE, TSX:CADUSD=X) 

Ross Marowits, The Canadian Press