Daily Wrap-up: TSX closes higher despite gold slump

TSX closes higher despite gold slump... BoC most concerned about household risk to financial system... Manufacturing sales have slipped after 2 months of gains...

Steve Randall
TSX closes higher despite gold slump
Gold prices dipped a further 3 per cent Thursday, hitting Canada’s producers, but despite corresponding losses for the materials sector, the main TSX index gained.

Half of the index’s groups fell: consumer staples, healthcare, utilities and financials; but the gains for the other half narrowly outweighed them, led by IT and industrials.

Wall Street’s main indexes all closed higher along with Europe, while Asian markets were mixed. The Fed was very much in focus.
The S&P/TSX Composite Index closed up 21.13 (0.14 per cent)
The Dow Jones closed up 59.71 (0.30 per cent)
Oil is trending higher (Brent $54.12, WTI $51.01 at 4.15pm)
Gold is trending lower (1130.00 at 4.15pm)
The loonie is valued at U$0.7493
BoC most concerned about household risk to financial system
Canada’s households are the biggest risk to the country’s financial system, the Bank of Canada said Thursday.

The bank warned that, despite the resilience of the financial system, high levels of household debt and high house prices are a potential problem. Potential fragility in fixed-income market liquidity is a third risk.

New housing policies including the recent tightening of some mortgage rules are expected to lessen the vulnerabilities over time, the BoC noted.

“These macroprudential policies will raise the underlying quality of household indebtedness over time, as well as financial institutions’ capital requirements and pricing criteria, which will make them more resilient to future shocks,” Governor Stephen S. Poloz said. “Accordingly, these policies will help mitigate financial stability risks over time.”

A large and persistent nationwide rise in unemployment, leading to a sharp correction in housing markets; is seen as the biggest overall risk but the bank notes that this is unlikely.

External risks from China, commodity prices and a sharp increase in interest rates is also seen as a potential risk.
Manufacturing sales have slipped after 2 months of gains
Two consecutive months of higher manufacturing sales were followed by a decline in October.

Statistics Canada says that there was a 0.8 per cent decline in sales to $51 billion as primary metal, petroleum and coal product, and machinery industries slipped. Constant dollar sales were down 1.7 per cent, reflecting a lower volume of goods sold.

Fifteen of 21 industries, 61 per cent of the manufacturing sector, saw lower sales.