TORONTO (CP) — The Toronto stock market advanced for a third consecutive session Tuesday as sharply rising oil prices supported a continuing rally the energy sector.
The S&P/TSX composite index closed 95.06 points higher at 13,647.26 after a combined advance of more than 300 points the previous two trading days.
The capped energy and materials sectors were among the top performers on the TSX as the November contract for benchmark crude oil soared $2.27 to US$48.53 a barrel, adding to a rebound from under US$45 just a week ago.
“We have (an) energy rally … that’s the key,” said John Stephenson, president and CEO of Stephenson and Company Capital Management.
“There is just a series of more bullish themes out there,” added Stephenson, pointing to a new report quoting a top OPEC official as predicting a rebound in prices and a short-term outlook from the Energy Information Administration calling for a decline in U.S. oil production.
That, along with the feeling that perhaps that badly mauled energy issues have been oversold has may traders believing “the worst is over,” he said.
“(But) I don’t think there is any compelling reason for that truthfully,” said Stephenson, who believes oil could still test lows under US$40 a barrel in the current slow-growth economy.
“I do think it goes lower and it goes lower because I don’t think that we have enough demand out there,” he said.
“That’s one of the issues that’s driven things down to this level and nothing really has changed tremendously.”
Beyond demand, supply issues also remain unresolved, with U.S. production cuts being far from “earth shattering” and with Iranian oil yet to come on the market as a result of an end to western-led sanctions, he said.
Elsewhere on commodity markets, November natural gas was up two cents at US$2.47 per thousand cubic feet, while the December gold contract rose $8.80 to US$1,146.40 an ounce
The loonie also continued its recent uptick, up 0.35 of a U.S. cent at 76.76 cents US.
In New York, markets were mixed as the Dow Jones industrial average posted a modest advance, up 13.76 points to 16,790.19, while the broader S&P 500 fell 7.13 points to 1,979.92
Biotechnology stocks were among the worst performing issues and the tech-heavy Nasdaq gave back 32.90 points to 4,748.36. The sector has been hammered in the past month on investor concerns that the industry might face more scrutiny from Washington over its drug pricing practices.
In corporate news, stock in First Quantum Minerals (TSX:FM) soared $1.30 or 21 per cent to $7.49 after the Vancouver-based mining and metals company said it wanted to slash outstanding debt by at least US$1 billion within six months though a combination of asset sales and other strategic initiatives.
First Quantum also announced it was cutting 644 people from its workforce and reducing salaries by up to 20 per cent while also lowering the cost target for its flagship Cobre Panama project by seven per cent to US$5.95 billion.
Brian McKenna, The Canadian Press
