Stock markets could be in for a relatively stable week as investors look to the inauguration of president-elect Barrack Obama and the details of a massive stimulus package.
“I think also the markets now will be watching to see if there is any further improvement on the credit market front and general signs that perhaps the deepest part of the downturn is behind us,” said Doug Porter, deputy chief economist at BMO Capital Markets.
“That’s not to say we’re going to be looking for growth any time soon but at least the economy won’t fall as quickly as it did in the fourth quarter — I think that’s what the market will be looking for.”
Stock markets in Toronto and New York ended the first full week of 2009 trading lower, after initially racking up some early gains, as retail and employment data indicated that the U.S.recession could be longer and deeper than was thought — and that even discount retailers won’t get off lightly.
Sentiment further darkened after Friday’s news that the American economy shed just over half a million jobs last month. That news was actually tempered with some relief, as many traders were worried that job cuts would come in at around 800,000.
The news was also grim in Canada where almost 35,000 jobs were lost during December.
“On the one side, we can say they were really no worse than expected but that doesn’t take away from the fact that the expectations were horrendous,” said Porter.
