TORONTO (CP) — The Toronto Stock Exchange rose for a second day, pushed higher by strength in the energy sector and a rising price for oil.
The S&P/TSX composite index rose 224.44 points to close at 14,301.80.
In the U.S., the Dow Jones industrial average climbed 121.12 points to close at 17,751.39, while the Nasdaq gained 22.52 points to 5,111.73 and the S&P 500 gained 15.32 points at 2,108.57.
Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, said global stock markets are back to normal after a period of instability fed by volatility in the Chinese stock market.
The Chinese government has stepped in with measures aimed at propping up its equity markets as the Shanghai composite index has slid, most recently losing more than eight per cent of its value in Monday trading.
China’s securities regulator said it would do even more to support the market after Monday’s fall, and Fehr said the volatility doesn’t necessarily indicate that China’s economy is faltering.
“That to me does pose a very big risk to markets over the broader term, but I think that these big, sharp reactions in the stock market in China are really more of a short-term move,” he said.
The September contract for crude oil gained 81 cents to US$48.79, while the September natural gas contract gained 4.8 cents to US$2.864.
The energy subsector of the TSX rose 3.52 per cent on the day, the biggest gain among the index’s 10 subsectors. Nine of the 10 subsectors showed growth, with the exception being health care.
Fehr said the energy sector was showing signs of life as the oil price begins to stabilize after dropping by more than half since July 2014.
Energy stocks have been weighed down by “extreme pessimism” about the fall in the price of oil, he said, but the market is moving towards an equilibrium around the $50 price point.
Even a small rise in the price of oil, he said, can attract investors spooked by the slide.
“Expectations have just been beaten down so dramatically in that sector,” he said.
The August gold contract closed down US$3.60 to US$1,092.60, while copper rose 0.5 of a cent to US$2.4075.
The loonie lost 0.10 of a cent to end the day at 77.26 cents US, falling back after rising in midday in advance of an announcement from the U.S. Federal Reserve following its two-day policy meeting.
The American central bank said it would hold rates steady and wait for further signs of economic recovery before taking further action. Many expect the Fed to raise interest rates later this year.
Fehr said the spread between the interest rate policies of the Canadian and American central banks could contribute to a further fall of the Canadian dollar against the greenback.
Peter Henderson, The Canadian Press
