TORONTO (CP) — The Toronto stock market enjoyed its second big advance in as many days Tuesday amid a rebound in oil prices.
The S&P/TSX index ended the day up 87.30 points at 13,710.31, on the heels of an almost 94-point advance on Monday.
A rise in oil prices was a big factor as the December contract for benchmark crude oil rose $1.76, or more than 3.8 per cent, to US$47.90 a barrel. The TSX energy subsector rose by 3.36 per cent, the most of any on the index.
Ian Nakamoto, director of research at 3Macs, said there was no specific reason for the rally, noting that the fall is usually a season when the market bounces back.
Over the last few months, he said, energy stocks have led the way downward as markets in the U.S. and Canada have taken a beating.
“Those stocks that really got hurt seem to be bouncing back here,” he said.
The loonie also fed off the increase, rising 0.28 of a U.S. cent to end the day at 76.62 cents US.
In New York, the Dow Jones average of 30 stocks closed up 89.39 points at 17,918.15, while the broader S&P 500 added 5.743 points to 2,109.798 and the Nasdaq rose 17.98 points to 5,145.13.
Elsewhere on commodity markets, December natural gas ended the day down 0.3 of a cent at US$2.253 per mmBtu, while December gold fell $21.80 to US$1,114.10 an ounce and copper added 1.15 cents to US$2.33 a pound.
Nakamoto said the fall in the value of the loonie versus the greenback since January has been driven by falling oil prices and the widening spread between the Bank of Canada’s interest rate, which has been cut twice, and the American central bank’s signals that it plans to raise rates soon.
“My general sense is that the U.S. dollar is going to advance, but at a much slower pace,” Nakamoto said.
The loonie doesn’t have much further to fall and the exchange rate will stabilize as Canada’s cheap dollar boosts exports to the U.S., its largest trading partner, he said.
Meanwhile, Nakamoto says he expects the U.S. Federal Reserve to raise its benchmark rate from near zero for the first time since 2008 at its next meeting in December.
Some market watchers have suggested that raising interest rates in the U.S., therefore making it more expensive for companies and investors to borrow, could have a negative effect on the market.
But Nakamoto says such concerns are overblown.
If the American economy is growing enough to warrant an interest rate hike, he said, then the stock market should be heading higher as well.
“I think we’re dying for a normal economic cycle,” he said.
The Canadian Press
