TORONTO – A big bounce in energy prices and strength in metals sent the Canadian dollar soaring Tuesday to its highest level since last summer, while the Toronto stock market saw a triple-digit gain.
The loonie rose 0.85 of a U.S. cent to 78.99 cents US — the highest it has been since July 6, 2015.
“It’s hard to see it continuing because our economy is in much worse shape than the American economy,” said John Stephenson, president and CEO of Stephenson & Co. Capital Management.
Stephenson said the loonie’s dramatic recovery — helped by rising oil and metals prices as well as better economic data out of China and the U.S. Federal Reserve’s decision to slow its pace of rate hikes — has led to the currency becoming somewhat overvalued.
“It might stay up around this level for a little while, but it’s unlikely to continue to be this strong for long,” Stephenson said. “I don’t think you’re going to see much more upside. I think we’re more likely to see downside from here.”
The S&P/TSX composite index rose 147.46 points to 13,867.28, with metals and mining stocks leading the way with an 8.75 per cent gain.
The energy segment of the TSX rose 3.26 per cent as the June contract for benchmark North American crude rose US$1.28 to US$42.47 a barrel.
The jump in oil prices came amid a strike by oil works in Kuwait to protest government cutbacks. The work stoppage has temporarily suspended production in that country.
Elsewhere in commodities, June natural gas shot up 14 cents to US$2.19 per mmBtu, May copper rose six cents to US$2.22 a pound and June gold advanced US$19.30 to US$1,254.30 a troy ounce.
In New York, markets were mixed, held back by a slide in technology companies that saw the Nasdaq composite shed 19.69 points to 4,940.33. The Dow Jones industrial average was up 49.44 points at 18,053.60, while the S&P 500 added 6.46 points to 2,100.80.
Among the losers was IBM (NYSE:IBM) which fell more than six per cent after the company delivered improved first-quarter earnings thanks to a big tax refund, but lower revenue amid weaker software sales.
Meanwhile, genetic testing tools maker Illumina (Nasdaq:ILMN) sank US$42.49 or almost 24 per cent US$135.65 after it forecast that sales in the first quarter will be far lower than analysts expected.
And Netflix (Nasdaq:NFLX) fell US$12.49 or 11.5 per cent to US$95.91 a day after the streaming video company’s latest subscriber forecast disappointed investors, while first-quarter revenue also fell short of Wall Street’s expectations.
Follow @alexposadzki on Twitter.