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The Canadian stock market rallied again in the last week of December to finish the month with a total return of 1.9%, leading to a 4th quarter gain of 1.7% and a full year gain of 7.2%. Bonds went in the other direction in December as long-term interest rates rose slightly; for the month, the Dex Bond Index fell by 0.1%, but was up 0.3% for the 4th quarter and generated a 3.6% return for the full year 2012. Looking more closely at stock attribution for the past year, most of the gains came from the larger stocks in the index as the S&P/TSX60 Index gained 8.1% while the S&P/TSX Small Cap index fell by 2.2% over the same period. Sector selection was also of key importance in the Canadian stock market last year as the Financials gained 17.6%, representing basically the entire gain for the market as this sector accounts for over 30% of the index. The 3 largest contributors to the index gain last year were 3 banks (Royal, Scotia,TD) followed by Nexen due to its takeover offer from CNOOC.
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