TORONTO – Canada’s biggest stock market strengthened Tuesday amid a rally in crude prices sparked by growing prospects that OPEC members will reach a deal on capping oil production later this month.
In Toronto, the S&P/TSX composite index gained 157.65 points, or one per cent, at 14,756.10.
Gold, energy and materials led advancers on the commodity-heavy exchange for a second day. The gold sector was up 3.58 per cent, energy gained 3.44 per cent and materials jumped 2.74 per cent.
The increase in oil prices was attributed to a media report that energy ministers from Saudi Arabia and Russia were set to meet this week to talk about a potential cap on crude production, ahead of a meeting by the Organization of Petroleum Exporting Countries on Nov. 30.
The 14-member OPEC had announced in September that its members have agreed to a production cut in principle, with details to be hammered out at its official meeting at the end of the month.
Investors found solace in the possibility that OPEC member Saudi Arabia may be talking with non-OPEC member Russia as a hopeful measure that will get other OPEC members to sign on to a deal.
“Any time there is a discussion, it’s akin to a handshake on a maybe,” said Ben Jang, a portfolio manager at Nicola Wealth Management.
The December crude oil contract spiked more than five per cent, adding $2.49 to US$45.81 per barrel.
Jang said the possibility of an OPEC deal is “obviously it’s good, constructive news, but potentially the markets are getting ahead of themselves here.”
In New York, markets were also in positive territory, with the Dow Jones industrial average climbing 54.37 points to 18,923.06, ahead for a seventh straight session and to another record close.
The S&P 500 advanced 16.19 points at 2,180.39, while the Nasdaq composite also grew by one per cent, rising 57.23 points to 5,275.62.
In commodities, the December gold contract rose $2.80 at US$1,224.50 an ounce.
Jang said the optimism in gold continues to be driven by the “uncertainty factor” arising from a Donald Trump U.S. presidency, which makes perceived safe havens like bullion more attractive to investors.
Most of the questions swirl around if Trump will carry through with his major infrastructure spending plans, or his proposed regulatory changes to the health and banking sectors.
“We’ve seen more uncertainty across the board and when you have uncertainty, gold will move higher,” said Jang.
In other resources, the December copper contract fell two cents at US$2.51 per pound and December contracts for natural gas lost four cents at US$2.71 per mmBTU.
The Canadian dollar gained 0.57 of a U.S. cent at 74.37 cents US.
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