This week traders may find it hard to find gains on stock markets as they consider if the ongoing market rally has slowed down while they are facing a looming deadline for automated and massive cuts in government spending to occur in the United States at the end of February.
As well, traders will consume reports from numerous top miners in the TSX resource sector.
The TSX dropped 0.9%, while the week ended flat for New York’s Dow industrials.
Gold miners in the U.S. have been dealing with struggles of higher material and labour costs, while oil companies were dealing with a more expensive differential between West Texas Intermediate crude and the Western Canadian select coming from the oilsands.
It is a shortened week for trading in the U.S. and Canada, because markets in America will be blocked by Presidents Day, while Ontario’s market will be halted for a Family Day Holiday.
The year for markets in North America began strongly after lawmakers in the Untied States reached a deal steering them away from the luminous “fiscal cliff” with sweeping spending cuts and tax hikes. the TSX ran up about 2.3% in January and the Dow industrials about 6%.
These gains are mainly intact, however, analysts would not be shocked to witness the tone turn and become a lot more cautious as the deadline approaches for sequestration legislation, at the end of the month, which would conclude with budget cuts across the board totaling a little over US$85.3 billion.
It would take a large chunk from economic growth in America, which is a troublesome thought for a struggling economy.
The chief portfolio strategist at TD Waterhouse, Bob Gormon, said that, “I would not be surprised to see this ramp up in the consciousness of traders quite a bit. It just has not been on the radar screen interestingly.”