Investors rally on stock market bounce

Investors are pouring into the Canadian stock market, and while the benchmark S&P/TSX composite index has recovered a little bit of ground in recent weeks, it still sits below its July highs.

The index’s gain has been more than twice as big as the index’s loss of 10.3 per cent over the past five months, according to FactSet data.

The gains are mostly in technology stocks.

The S&amps tumbled 7.3 points, or 1.5 per cent, to 5,966.55 on Wednesday, compared with a 1.4-per-cent drop for the TSX composite.

The gain was the second-biggest gain among all Canadian stocks over the period, and the biggest gain among U.S. shares, according, FactSet.

The rally in the index has been driven by the rebound in the Canadian dollar.

The price of the greenback has fallen against the U.K. dollar since its recent decline, as investors seek to buy Canadian shares and buy into emerging markets.

That has helped to boost demand for Canadian equities, which have enjoyed a rebound from a slump in oil prices and geopolitical tensions.

But there is a risk the Canadian economy is slowing.

“We have a real problem with a number of sectors that are very much struggling, and we have a very high level of unemployment, so it’s certainly going to be a factor in our growth,” said David McCallion, chief economist at BMO Capital Markets.

“If you look at the economy, it’s already slowing down, so we’re not going to see a big rebound in Canada.”

The Dow Jones Industrial Average rose nearly 2,000 points, adding a little more than 4 per cent to 23,923.06.

The Nasdaq composite gained about 2 per cent but fell almost 9 per cent.

The Russell 2000 rose more than 6 per cent in after-hours trading.