Stock market recovery in the cards, advisors believe

(April 17, 2003) With the Iraq conflict all but resolved, Canada’s financial advisors are looking for a stock market rally, suggests a survey conducted by The ADVISOR Group. Nearly 60% of advisors responding to a recent online poll said they expect stock prices to rise over the next few months.

When the same question was asked in March, 46% predicted a stock rally.

Only 9% said they expected stocks to fall, while about one-third said they believe stock prices will stay the same, the April poll found.

Since the end of March, the S&P/TSX Composite Index has risen more than 2% while the S&P 500 has added nearly 4%. Year to date, the TSX is off 2% while the S&P 500 is flat.

Expectations for the performance of bonds have declined steadily since the Omnibus poll was introduced in February. At that time, 12% of respondents expected bonds to rise. That fell to 8% this month. More than half expect bonds to decline while 40% think they will remain stable.

In March, 75% of advisor respondents said they expected the Bank of Canada to raise interest rates. The central bank did just that earlier this week, hiking its key lending rate 25 basis points to 3.25%, citing rising inflation. About two-thirds of advisors are looking for another rate increase over the next three months, the poll found. The next interest rate announcement is June 3.

Two hundred and thirty-five advisors responded to the April Omnibus survey, promoted in Advisor.ca’s daily e-mail bulletins. This is the third month of polling. Similar surveys will be conducted each month and the results will be compared to past polls.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

(04/17/03)