Canadian Stocks Rise With U.S. Government Shutdown In Focus

(RTTNews) - Canadian stocks moved higher on Wednesday, with the U.S. government entering a shutdown early today. As a result of the shutdown, gold prices rose to a new record high, and this helped major mining stocks in the Canadian materials sector, which lifted the market.

After opening just a little higher than yesterday's close, the benchmark S&P/TSX Composite Index managed to gain momentum and traded positive throughout the session before finally settling at 30,107.67, up by 84.86 points (or 0.28%).

Today's close is a new record for the index. Of note, yesterday, it topped 30,000 points for the first time in its history.

Eight of the 11 sectors posted gains today with Healthcare sector leading the pack.

As the hectic parleys between Republicans, including U.S. President Donald Trump, and Democrats to pass a bill that would allow short-term funding to keep the government machinery did not succeed, the U.S. has entered into a shutdown.

Democrats demanded amending healthcare benefits to include an extension of Obamacare (Affordable Care Act) tax credits but Republicans insisted on passing the bill first before negotiating other issues. As each side stuck to its demands, talks failed, resulting in the shutdown.

With Trump planning to lay off a large number of workers across the U.S., instead of furloughing (as was the practice during previous shutdowns), concerns have risen about the effects on the economy.

The absence of federal employees also deprives the markets of necessary data releases in the coming days until the shutdown is lifted.

Particularly, the key labor and inflation data which drives the U.S. Federal Reserve in its decision-making would not be published. As a result, the Fed's monetary outlook could be cloudy and hamper any forecast.

Due to this uncertainty, gold climbed to $3,867.50 per troy ounce - a new record high.

Major mining stocks in Canada posted sharp gains, helping the index jump higher.

For Canada, as U.S. is the major marketplace for its businesses, a shutdown there is a cause for concern.

For the month of September, the S&P Global Canada Manufacturing PMI fell to 47.7 from 48.3 in August, reflecting a contraction in Canadian factory activity, apparently impacted by the 35% U.S. tariffs. This is the eighth consecutive month of decline in manufacturing.

A reading below 50 indicates a contraction in the sector.

As months of negotiations on tariffs involving high-level officials from Canada and U.S. are heading nowhere, Canadian firms are severely under stress.

Meanwhile, speaking to senior military officials at an event in Virginia about the Golden Dome missile defense system that the U.S. is developing, Trump stated that Canada could also be covered by it if the country becomes the 51st state of the U.S.

When Trump expressed the possibility of merging Canada with the U.S. months before, Canadian Prime Minister Mark Carney stressed that his country is not for sale.

This time, he has not officially responded to Trump's revival of this topic once again.

Major sectors that gained in today's trading were Healthcare (2.99%), Communication Services (1.08%), IT (0.96%), and Materials (0.93%).

Among the individual stocks, Novagold Res Inc (15.04%), Aya Gold and Silver Inc (6.27%), Centerra Gold Inc (5.16%), K92 Mining Inc (4.52%), Curaleaf Holdings Inc (7.05%), and Sangoma Technologies Corp (6.51%) were the prominent gainers.

Major sectors that lost in today's trading were Financials (0.10%), Real Estate (0.09%), Consumer Staples (0.13%), and Energy (0.15%).

Among the individual stocks, Cenovus Energy Inc (1.31%), Suncor Energy Inc (1.17%), Maple Leaf Foods (3.08%), Colliers International Group Inc (1.35%), and Firstservice Corp (1.08%) were the notable losers.