Canada exchange traded funds jumped Friday, with Canadian equities touching a five-year high, on an unexpected spike in consumer spending that helped bolster fourth quarter growth.
Canada’s consumer spending increased at a 3.1% annualized pace in the fourth quarter, pushing gross domestic product growth up to a higher-than-expected 2.9% annualized pace over the third quarter, despite a 0.5% contraction in December, reports Greg Quinn for Bloomberg.
“While today’s GDP report is a bit of a mixed bag, the bigger picture is that the Canadian economy looks to have had better momentum than widely appreciated through much of 2013,” Doug Porter, chief economist at BMO Capital Markets, said.
Bank of Canada Governor Stephen Poloz has projected that it will take about two years for the economy to run at full speed. Looking ahead, economists believe Poloz will keep benchmark rates at 1% at a March 5 policy meeting.
As the markets digested the unexpectedly higher fourth quarter data, the Standard & Poor’s/TSX Composite Index touched 14,277.55 in mid-day trading Friday, its highest level since June 2008, reports Eric Lam in a separate Bloomberg article. The index has gained 4.3% this month.
“It’s still a pretty good environment for equities,” Michael O’Brien, fund manager at TD Asset Management Inc., said in the article. “You have an economy that’s growing but not growing so fast that the central bank has to take away the punchbowl. Growth of 2.5 percent to 3 percent isn’t bad, and there are no worries about rising interest rates.”