TSX Bullish, On It’s Way to Erasing Q4 2018 Meltdown

After an abysmal 2018, the TSX is one of the top performing stock markets in 2019; at least so far. Canadian stocks have been bullish thanks to some big names reporting strong fourth quarter results, strengthening crude oil prices, buoyant natural gas, and hopes that President Trump will delay increasing tariffs on Chinese imports. While the TSX is on a solid trajectory, there are some near term concerns which could result in the markets trading sideways or stalling out.

TSX Up 13.5% So Far in 2019—But Momentum Could Stall

In 2018, the TSX suffered its worst year in a decade. The TSX fell 12% in 2018, closing out the year at 14,322. Most of that drop came about in the fourth quarter of the year. It was a perfect storm of economic uncertainty.

Global stocks fell in October and tumbled again in December as fears about a global trade war between the U.S. and China, the world’s two largest economies, ramped up. Canadian stocks also faced headwinds from rising interest rates, a housing slowdown, cuts in crude oil production, and weak consumer spending.

It wasn’t just the TSX that experienced a meltdown, global stocks did too. The S&P 500 ended 2018 6.5% in the red and the Nasdaq was down 4.3%. It was the worst December to hit Wall Street since the Great Depression.

Since the start of 2019 though, the TSX has reversed its downward spiral. The TSX is up 13.5% so far this year and is just three percent from the record high it set last July. Why the positive momentum? There is optimism about crude oil prices and higher natural gas contracts. Strong corporate earnings from bigger names like Manulife Financial Corp. (TSX:MFC) and TransCanada Corp. (NYSE:TRP) have also helped fuel investor optimism. Thanks to better than expected quarterly results both companies have increased their dividends and share buybacks.

The momentum on Bay Street is expected to continue should the trade dispute between the U.S. and China be diverted. President Trump said he may extend the March 1 deadline for increasing tariffs on $200 billion-worth of Chinese imports from 10% to an eyewatering 25%.

That said, Trump has not set a new date for when he could raise tariffs if things don’t go as expected. There are fears that an ongoing trade war will disrupt global trade and weaken already sluggish economic growth.

Meanwhile, the TSX could face pressure in the coming weeks. Fourth quarter growth is expected to show the country’s gross domestic product (GDP) expanded at just 0.8% and 1.2%. Far worse than the 2.0% GDP growth reported in the third quarter of 2018. First quarter 2019 GDP isn’t expected to be exactly be stellar either.

That kind of chill could see the TSX’s momentum stall.

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

The TSX is off to a great start in 2019. But there are still challenges facing the Canadian economy, and by extension, Canadian stocks. The trading professionals at Learn-To-Trade.com can teach you proven trading strategies that can help make money if stocks are going up, down, or sideways,

As Canada’s oldest and leading provider of stock market trading courses, the trading experts at Learn-To-Trade.com can help you trade more confidently and profit on a consistent basis.

Our instructors will provide you with the guidance and skills you need to conduct a technical analysis on stocks, understand fundamentals, read economic cycles, and spot market trends. You’ll also become familiar with cryptocurrencies, forex trading, foreign markets, commodities & futures trading, and stock index trading. We’ll also teach you about risk management and capital preservation.

At Learn-To-Trade.com, we understand that investors have different needs. That’s why we provide a unique Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

Photo Credit: iStock.com/phive2015

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George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

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