TSX posts 7-month high as investor optimism in uptrend grows

By Fergal Smith

(Reuters) -Canada's main stock index posted its highest closing level in more than seven months on Thursday as investors grew more hopeful that the market had bottomed and looked for positive catalysts, such as the reopening of China's economy, to spur further gains.

The Toronto Stock Exchange's S&P/TSX composite index ended up 100.90 points, or 0.5%, at 20,700.50, its highest closing level since June 8.

It follows a decline of 8.7% for the TSX in 2022, along with losses for many other major indices, as central banks raised interest rates aggressively to tackle soaring inflation.

"What seems to becoming more apparent is that the market bottomed out in October," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

"That pullback we had in December was mostly related to tax-loss selling because as soon as the tax-loss trading deadlines passed, the market started going back up again."

Tax-loss selling is a strategy in which investors sell stocks that have fallen in value, creating a loss that can be used to offset capital gains elsewhere.

Wall Street also ended higher as investors grappled with an onslaught of economic data and a string of mixed corporate earnings.

"Generally earnings have been ok, people are preparing for China to reopen and markets have been trending upwards," Cieszynski said.

Optimism about the reopening of China's economy and data showing the U.S. economy expanded at a faster-than-expected pace in the fourth quarter helped boost the price of oil. It settled 1.1% higher at $81.01 a barrel, while the Toronto market's energy sector was up 2.5%.

Technology rose 0.9% and heavily-weighted financials ended 1.1% higher.

Forest products companies were among the strongest gainers, with Interfor Corp climbing 10.4% and Canfor Corp ending nearly 9% higher.

(Reporting by Fergal Smith; Additional reporting by Shashwat Chauhan in Bengaluru; Editing by Shailesh Kuber and Alistair Bell)