The close: TSX jumps to four-week high as resource shares rally

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April 18, 2018
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The close: TSX jumps to four-week high as resource shares rally

Canada’s main stock index rose for the fifth straight day on Wednesday to reach a four-week high, as energy and metal mining companies led broad-based gains, boosted by higher commodity prices.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 176.67 points, or 1.15 per cent, at 15,529.97. All of the index’s 10 main groups ended higher.

The energy sector rose 3.6 per cent, as oil prices jumped on a decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see prices closer to $100 a barrel.

Shares of Suncor Energy Inc. rose 2.3 per cent and oil and gas producer Canadian Natural Resources Ltd. ticked 3.7 per cent higher.

Crescent Point Energy Corp. was up 6.6 per cent, while Vermilion Energy Inc. finished 6.4 per cent higher.

Materials stocks jumped 1.9 per cent, led by a 6.7-per-cent increase in First Quantum Minerals Ltd. and a 3.1-per-cent rise from Nutrien Ltd. and Teck Resourrces Ltd.

The financial sector, which accounts for about 35 per cent of the TSX’s weight, also gave a boost with its 0.5-per-cent advance.

While the Bank of Canada held interest rates steady, as expected, it said more hikes will be needed over time and pointed to a pick up in wage growth and inflation, two issues that have concerned the central bank.

The central Bank, which has increased rates three times since last July, trimmed its economic growth forecast for 2018 and raised the outlook for 2019 saying the temporary factors weighing on inflation have largely dissipated.

Royal Bank of Canada rose 0.8 per cent, while Bank of Nova Scotia increased 0.5 per cent. Manulife Financial Corp. jumped 0.9 per cent.

The Canadian dollar weakened to a one-week low against its U.S. counterpart on Wednesday, pressured by a more cautious message on trade than some investors had expected from the Bank of Canada.

At 4 p.m. ET, the Canadian dollar was trading 0.6 per cent lower at $1.2624 to the greenback, or 79.21 U.S. cents. The currency’s strongest level of the session was $1.2548, while it hit its weakest since April 10 at $1.2660.

On Tuesday, the loonie touched its strongest level in nearly two months at C$1.2528.

The Canadian dollar is on course to strengthen in April for the eighth time in the past 10 years, a sequence strategists link to seasonal vitality in stocks and energy products, rewarding investors who trade on market patterns.

In New York, the S&P 500 eked out a small gain while the Dow ended lower after a volatile trading session on Wednesday, with weakness in sectors such as consumer staples and financials offsetting strong gains in the energy and industrial indexes.

The Dow Jones Industrial Average fell 38.63 points, or 0.16 per cent, to 24,748, the S&P 500 gained 2.26 points, or 0.08 per cent, to 2,708.65 and the Nasdaq Composite added 14.14 points, or 0.19 per cent, to 7,295.24.

The U.S. dollar clung to gains amid fading concerns over a global trade war, while a reported decline in U.S. crude inventories and the possibility of supply disruptions pushed oil prices higher.

MSCI’s gauge of stocks across the globe gained 0.55 per cent, near its highest since March 21.

The index was supported by a higher open on Wall Street, following the latest batch of earnings. Morgan Stanley shares rose after the bank reported a 40 per cent jump in quarterly profit, driven by its trading business.

“Earnings continue to progress on the positive side and commodities are also on the rise; that should give the markets another boost,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Investors appeared to be focusing on fundamentals after weeks dominated by geopolitical tensions.

“The safety trade that we have experienced seems to have ended,” said Cardillo.

Shares of International Business Machines Corp tumbled 7.5 per cent after its profit margins fell short of Wall Street expectations.

European shares firmed amid strong company results, including those from French food group Danone, private healthcare provider Mediclinic and Dutch oil and chemical storage company Vopak.

The pan-European FTSEurofirst 300 index rose 0.30 per cent.

The U.S. dollar held steady versus a basket of major currencies as solid company results and fading concerns about a trade war helped keep a lid on safe-haven demand for the greenback.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.09 per cent.

Trading across U.S. government bond maturities was range-bound on Wednesday, with yields little changed in spite of gains in the equity market in the last few sessions.

“Generally, the bond market seems to be under-reacting to both the sell-off and the rally,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

Benchmark 10-year Treasury notes last fell 12/32 in price to yield 2.858 per cent, from 2.814 percent on Tuesday.

Oil extended gains, rising more than 2 per cent on a reported decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel.

U.S. crude oil futures settled at $68.47 per barrel, up $1.95 or 2.93 per cent. Brent futures settled at $73.48, up $1.90, or 2.65 per cent.