04:30 PM EST, 12/20/2024 (MT Newswires) -- The Toronto Stock Exchange slipped out of its Santa Claus slump on Friday, closing the week with the first gain in seven sessions largely on some bargain buying and steadying commodity prices, with some hopes the market can now go on a Santa Claus Rally.

The S&P/TSX Composite Index closed up 185.54 points to end at 24,599.48. Among sectors, most were higher, led by Health Care, up 2.4%. Only the Battery Metals Index posted a modest loss.

Of stocks, National Bank of Canada ( NTIOF ) , closed up $0.62 at $131.91 after receiving final approval for the acquisition of Canadian Western Bank ( CWESF ) , while also announcing changes to its senior leadership team. National Bank said the Minister of Finance has approved the $5-billion acquisition first announced in June, concluding the regulatory process, as it follows reviews by the Office of the Superintendent of Financial Institutions (OSFI) and the Competition Bureau. The closing of the deal is expected to occur on Feb. 3.

Still, the TSX closed about 120 points below the intraday high as Jagmeet Singh, leader of the opposition New Democratic Party said his party will bring forward a non-confidence motion to bring down the governing Liberals in the next sitting of the House of Commons, which isn't currently scheduled to sit again until January 27, 2005.

This could lead to Canada's current government being brought down just as President-elect Donald Trump takes office in the United States amid a threat that he will introduce tariffs on Canadian goods, a prospect that is likely to make it harder for Canadian investors to either start, or continue, believing in market rallies.

On the subject of whether or not there is such thing as a 'Santa Rally', Scotiabank in a note today addressed investors wondering what to do over the holiday period, and in to the new year. "Staying invested is the usual advice in light of the moderate evidence of a Santa Rally effect on stocks. Then be nimble into the risks that 2025 may bring," it wrote, while noting there are plenty of academic pieces on the topic with conflicting evidence. Scotia cited charts that show stocks are more likely to go up than down over this period despite lower volumes, fewer trading catalysts and with more market participants away from work. The bank said "Given stock market volatility just before the holiday season it may be that the Santa Rally won't hold unless the market has recalibrated to the Federal Reserve's changed narrative. Trump is a naughty wildcard."

Supporting the possibility of a rally, National Bank in a report said "it's not all doom and gloom" for Canada. It noted the residential housing market "has come back to life and that's good news", especially as this sector of activity often has a major indirect impact on spending on renovation and retailing. National Bank added: "Thanks to the interest rate cuts that have been made, the conditions now appear to be in place for GDP per capita to stabilize and the unemployment rate to stop rising in the first half of 2025. In the coming months, we will therefore be able to determine whether the central bank has achieved a soft landing or whether it has inflicted more damage on the economy than was necessary in its fight against inflation."

National Bank expects GDP growth of 1.4% in 2025 and 1.5% in 2026, slightly higher than the 1.2% it estimates for potential economic growth, held back by a weak demographic outlook.

"Obviously," the bank said, "this outlook could be disrupted by an escalation in trade tensions with the United States. We remain hopeful that, in the months ahead, Canada will be able to demonstrate that it can be a key ally in the implementation of the US economic security agenda, which includes, in addition to domestic re-industrialization, tighter border controls and the promotion of energy security."

Also supporting the possibility of a rally, RBC Economics noted the final major data point from Statistics Canada in 2024 will be Monday's gross domestic product release for October, which will be the last GDP print before the Bank of Canada's Jan. 29 meeting. RBC looks for a 0.2% increase that would be the strongest monthly gain since April, and firmer than the 0.1% advance estimate a month ago.

Still, RBC expects the early estimate for November GDP will show limited growth, even with a likely boost in the entertainment sector from two weeks of unusually well-attended Taylor Swift concerts in Toronto. RBC noted a 0.2% pull-back in November hours worked was partially related to labor disputes at ports and the Canada Post strike. RBC said its tracking of consumer spending also looked softer in November with early holiday shopping potentially delayed ahead of a GST holiday that started mid-December.

West Texas Intermediate crude oil closed with a small gain on Friday as the dollar fell off a two-year high. WTI oil for February delivery closed up US$0.08 to settle at US$69.46 per barrel while February Brent crude was last seen US$0.16 to US$73.04.

Gold moved higher late afternoon after falling for the previous six sessions as the dollar eased off a two-year high after a key U.S. inflation measure rose less than expected in November. Gold for February delivery was last seen up $35.10 to US$2,643.20 per ounce, following a drop of 5.4% over the losing streak.