Source: The Canadian Press

The Toronto stock market could be in for some lacklustre trading with a scarcity of market moving economic data and New York markets winding down trading mid-week ahead of the U.S. Thanksgiving holiday on Thursday.

“That is a very big deal south of the border so things tend to really lighten up both as you approach that holiday and certainly the day after, the Friday tends to be a very light trading day as well,” said Bob Gorman, Chief Portfolio Strategist TD Waterhouse.

“You’re going to have very light trading in the latter half of the week.”

However, investors will get a good indication of how the all-important Christmas retail season is shaping up at the end of the week. The day after Thanksgiving, Black Friday, is the start of the holiday shopping period and has that title since it’s reckoned that merchants move from a loss to a gain position in the last month of the year.

And with American consumer spending making up about three quarters of the economy, there are high hopes for this holiday season.

“That’s probably going to be the news of the week, I think,” added Gorman.

“That is a very big day in the retail world.”

The latest U.S. retail news indicated positive momentum going into yearend. Last Monday, the U.S. Commerce Department reported that retail sales increased in October by the largest amount in seven months, rising by 1.2%, helped by strong demand for autos.

As markets go into the home stretch for the trading year, volatility has been picking up on markets.

There are worries about what steps China may take to drag inflation lower and financial help for Ireland, which has been struggling to come up with the billions needed to bailout banks that were slammed by the collapse of the real estate market.

Late last week, the Chinese government told banks they must hold more reserves after inflation in China shot up to a more than two-year high last month.

There is also growing expectation China will raise key interest rates soon as part of the inflation fight and that raises concerns such moves could also slow China’s strong economic growth.

There have been many hopes pinned on China and other emerging countries to help pull Western countries out of recession.

Meanwhile, Ireland was locked in negotiations with the European Union and International Monetary fund amid questions on what conditions Ireland would take an international bailout.

On the firing line was Ireland’s prized low business tax, which the government says has lured 1,000 multinationals to Ireland over the past decade — but which it may have to give up to satisfy conditions of being rescued.

The TSX is up about 9.8% year to date and an even more impressive 14% since the lows that were hit during July.

And with no serious correction or testing of those lows, there are worries the TSX could be ripe for some sort of pullback.

“This is a very substantial move we have had,” added Gorman.

“I expect we will close the year in a positive note, that’s been my expectation throughout, but in the very near term I wouldn’t be at all surprised some short term weakness. It’s just a reflection of the fact that we have come a long way in a short time.”

On the economic calendar for the week, the prime Canadian report comes out on Tuesday. Consumer price index data for October is expected to show prices shooting up at the fastest year-over-year pace since 2008 because of higher gasoline prices. But economists think core inflation should have moderated. They look to the CPI rising at an annualized rate of 2.2%.

Canadian retail sales for September also are released on Tuesday and economists expect they rose by 0.7%, reflecting a sharp upturn for auto sales.

The key U.S. number for the week is Durable Goods Orders for October. They are forecast to have risen by 0.1% over September.