S&P/TSX Composite index surges on Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal
Canadian banks drove the S&P/TSX Composite index (INDEXTSI:OSPTX) to a strong finish last week as the Royal Bank of Canada (TSE:RY), Toronto-Dominion Bank (TSE:TD), and Bank of Montreal (TSX:BMO)(NYSE:BMO), all shouldered more value as the likelihood of Donald Trump failing to become inaugurated as President of the United States appears more and more likely.
Royal Bank rose 0.8 percent, or $0.75 to close at $94.50 a share on volume of 2.3 million shares, while Bank of Montreal shares were flat closing at $97.97 on volume of 1.6 million shares. Toronto-Dominion saw a flat close as well on volume of 2.8 million closing the first full week of 2017 at $67.10 a share.
The banks have been performing strongly as the U.S. dollar continues to show signs of weakening as the prospect of a Trump presidency begins to waver, based on serious and apparently credible allegations that Trump’s office has been in continuous contact with Russia’s spies, who have been feeding him data stolen from Democratic party servers. He, in turn, has been feeding them to the F.B.I., who, thanks to FBI director James Comey, have now directly contributed to Russian interference with the election.
<H2>Bank CEO’s Divided on Trump</h2>
Royal Bank of Canada CEO David McKay told a group of investors that he thought Trump, if inaugurated, would have a positive effect on Canadian banks’ US operations. “That would be a boost. It would potentially lead to higher rates which is very good for our franchise in the United States,” he said.
Victor Dodig, CIBC’s Chief Executive was a little more circumspect. “I think that there’s some inconsistencies in terms of the messaging about protectionism, good tax policy and good trade policy,” he said. “What actually gets implemented, and how it’ll look, and what kind of economic benefit that will deliver is yet to be seen. I’m not going to predict where that might go.”
Banks are also expected to close hundreds of branches across Canada in 2017, which is making them more attractive from an expense-reduction perspective.
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