FILE – The Toronto Stock Exchange Broadcast Centre is shown in Toronto on June 28, 2013. THE CANADIAN PRESS/Aaron Vincent Elkaim

Toronto stock market soars to near eight-week high on surging energy sector

Stock markets also rose in the U.S. even though its economy slipped into recession

Canada’s main stock index soared to a near eight-week high Wednesday as the energy sector surged despite producers posting big losses as they cut oil production amid low crude prices.

The S&P/TSX composite index closed up 429.82 points at 15,228.11 to the highest closing since March 6.

Stock markets also rose in the U.S. even though its economy slipped into recession and the Federal Reserve pointed to a protracted recovery.

In New York, the Dow Jones industrial average was up 532.31 points at 24,633.86. The S&P 500 index was up 76.12 points at 2,939.51, while the Nasdaq composite was up 306.98 points at 8,914.71.

READ MORE: More than half of Canadian companies seeing sales drop at least 20%: StatCan

“The risk-on mood has extended itself into a third day this week which has added to the impressive comeback that we’ve seen here in April,” said Candice Bangsund, portfolio manager for Fiera Capital.

She said equity climbed on renewed hopes for a viable treatment to fight the novel coronavirus, which helped offset weaker-than-expected GDP results that showed the economy shrank 4.8 per cent in the first quarter.

Gilead Sciences and the U.S. government reported that remdesivir shortened the time it takes for COVID-19 patients to recover by four days on average if taken early.

That’s a different message than last week when a Financial Times report suggested the drug was not successful.

Bangsund said the effectiveness of the drug is by no means a done deal but the market rallied on hopes it’s proven successful.

“The market is pretty optimistic about the potential recovery and the fact that economies are going to be reopened here in May,” she said in an interview.

However, the Fed dampened hope of a V-shaped or quick recovery by warning that the pandemic will weigh on the economy longer than expected.

Bangsund said the central bank’s outlook is consistent with her view that reopenings are going to be staggered and take longer.

She said the weakest economic growth by the United States since the financial crisis should have been viewed negatively but equity markets have been largely unfazed by grim economic and corporate earnings results.

“Markets are really looking through the current economic destruction and towards an eventual global economic comeback.”

READ MORE: March job losses just ‘a tiny snapshot’ of full impact of COVID-19: B.C. professor

The energy sector led a broad-based rally on the TSX, gaining more than 13 per cent with shares of several producers climbing by double digits. Crescent Point Energy Corp. and Shawcor Ltd. each rose 17.5 per cent while MEG Energy Corp. was up 17.2 per cent.

The increases flowed as the price of crude oil surged on a U.S. report that gasoline demand jumped and fourth straight week of declining production. That helped to alleviate concerns about storage availability amid weak demand.

“It’s added to hope for an eventual rebalancing in the market and a decline in that massive supply glut that’s been weighing on markets for the last few months,” she said.

The June crude contract was up US$2.72 or 22 per cent at US$15.06 per barrel and the June natural gas contract was down 7.9 cents at nearly US$1.87 per mmBTU.

Higher crude prices helped the Canadian dollar, which traded for 71.83 cents US compared with an average of 71.54 cents US on Tuesday.

The heavyweight financials sector rose 4.3 per cent and consumer discretionary was up 3.3 per cent.

Only consumer staples was lower.

Materials rose less than a percentage point as gains by forestry companies like West Fraser Timber Co. Ltd. were partially offset by the impact of lower gold prices.

The June gold contract was down US$8.80 at US$1,713.40 an ounce and the July copper contract was up 2.5 cents at US$2.37 a pound.

Despite improved sentiment, Bangsund fears the market could be getting ahead of itself with valuations back to pre-COVID levels.

“Given that there’s still so much uncertainty out there, we think maybe things have gone a little too far too fast and markets could be vulnerable to a near-term correction.”

Ross Marowits, The Canadian Press


Like us on Facebook and follow us on Twitter.

Coronaviruseconomyoil and gas

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Sparwood’s Causeway Bay Hotel reports COVID-positive guest

The hotel manager said guests who ate at the Gateway Restaurant at the same time do not need to be tested

City of Fernie issues water upgrade updates

City changes include construction, water restrictions, and a water quality advisory

Business Beat

Kaitlyn Poirier joins ET Hair Salon

Elkford Chamber launches a Youth Chamber Program

The program encourages youth to start their own businesses while developing community connections

Grad Committee donates leftover funds to food bank

Approximately $3,650 was donated to the Salvation Army Food Bank in Fernie

Teachers to get 2 extra days to prepare for students’ return, now set for Sept. 10

Students will first start with orientation and learn rules of COVID-19 classroom policies

Feds commit $305M in additional funds for Indigenous communities during COVID-19

Money can be used to battle food insecurity and support children and mental health

Hobo Cannabis renamed Dutch Love after backlash

Hobo Cannabis has various locations in Vancouver, Kelowna and Ottawa

Man accused of killing Red Deer doctor says he does not remember attack

Appearing before a judge, Deng Mabiour, 54, rambled about being sick and needing a doctor

Teen killer Kelly Ellard gets day parole extension, allowing up to 5 days at home

Ellard is serving a life sentence for the 1997 murder of 14-year-old Reena Virk

Andrew Scheer likely marking last day in House of Commons as Opposition leader

Today’s Commons sitting is one of two scheduled for August

Deaths feared after train derails amid storms in Scotland

Stonehaven is on the line for passenger trains linking Aberdeen with the cities of Edinburgh and Glasgow

DFO says 5 aggrieved B.C First Nations were consulted on fisheries plan

Nuu-chah-nulth First Nations calls response ‘a sham,’ adding DFO never incorporates their views

Lower Mainland woman gives birth on in-laws’ driveway

Frédérique Gagnon new son is appropriately named after Norse trickster god

Most Read