Oil price outlook sparks stock market rallies in Toronto, New York; loonie soars

TORONTO – North American stock markets rallied and the loonie neared 76 cents US Friday after an optimistic outlook for oil prices suggested they may have already reached their lowest point.

The loonie hit a morning peak of 75.93 cents US — up a full cent from Thursday’s close — but later fell back to close up 0.65 of a U.S. cent at 75.58 cents US.

The currency’s strength came despite a Statistics Canada report that the national unemployment rate had risen to a three-year high in February. The loonie suffered a brief setback on the news, but recovered shortly thereafter.

A jump in oil prices helped boost the commodity-sensitive loonie.

The April contract for benchmark North American crude rose 66 cents to US$38.50 a barrel after the International Energy Agency said there are signs that prices may have “bottomed out” after having hit a 13-year low of $26.21 exactly one month ago.

On the Toronto Stock Exchange, the S&P/TSX composite index closed up 142.86 points at 13,522.00. The TSX posted its third consecutive weekly advance, finishing 2.3 per cent higher than last week’s close.

Stocks on Wall Street capped a four-week rally.

In New York, the S&P 500 gained 32.62 points to 2,022.19, while Dow Jones industrial average soared 218.18 points to 17,213.31 and the Nasdaq rose 86.31 points to 4,748.47.

It’s been a “terrific four-week run” Phil Orlando, chief equity strategist at Federated Investors, told The Associated Press.

However, Orlando conceded the run has made him a “little nervous” amid fears of a steeper slowdown in China, an even stronger U.S. dollar that would hurt exports and a continuing drop in corporate profits.

“Don’t discount the fiscal policy uncertainty of the (U.S. presidential) election,” he added.

“As painful as the first few months of the year were, things (are) looking more optimistic for investors,” said John Stephenson, president and CEO of Stephenson & Company Capital Management.

He expects the gains to continue for the next few weeks, but said unresolved issues, like central banks resorting to negative interest rates and little government action around fiscal policy changes, could still spiral the markets lower.

“I’m very cognizant of the fact that it’s very possible to see extreme volatility again,” said Stephenson.

He anticipates periods of relative calm followed by extreme volatility.

Elsewhere in commodities, the April contract for natural gas rose three cents to US$1.82 per mmBtu and May copper rose two cents to US$2.24 a pound. April gold fell $13.40 to US$1,259.40 a troy ounce.

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