TORONTO – Canada’s main stock market soared to its highest level in more than nine months Wednesday, fuelled by strong gains in energy and bank stocks.
The S&P/TSX composite index in Toronto racked up 100.89 points to settle at 14,053.74. The last time it closed above the 14,000 mark was on Aug. 19, 2015.
The biggest advancer on the commodity-heavy index was the metals and mining sector, followed by energy issues, which were boosted by a report that showed a decrease in U.S. oil stockpiles.
The U.S. Energy Information Administration said crude stockpiles fell by 4.2 million barrels last week, which surprised analysts who were expecting a smaller drop.
Signs that crude supply is declining helped lift the July crude contract up by 94 cents at US$49.56 a barrel.
“The market is focused on this because it is the best data points you can have for inventories,” said Steve Belisle, a senior portfolio manager of equities at Manulife Asset Management.
“But they’re not necessarily representative of global inventories. One thing for sure is that … drilling has declined significantly, so production is declining. We’re expecting oil to go even higher in a one- to three-year time frame.”
Traders tend to look at crude inventories to determine whether a balance between supply and demand has been struck. In 2014, a barrel of oil surged above US$100 levels, but a global glut in crude supplies have weighed on prices since then.
The Canadian dollar, which trades closely with crude values, also found strength. It added 0.72 of a cent to settle at 76.79 cents US.
The uptick came after the Bank of Canada announced it was holding its key interest rate steady, a signal that the central bank still thinks the economy is growing steadily.
Growth in the first quarter appears to be in line with its April forecast, although business investment and intentions remain disappointing, the central bank said.
It also warned that the Canadian economy will weaken in the second quarter due to Alberta’s devastating wildfires, which curtailed oilsands production. The bank expects the economy will rebound in the third quarter as production resumes.
In corporate news, the Bank of Montreal (TSX:BMO) reported that its latest quarterly profits fell three per cent from a year ago as it took bigger provisions for credit losses and restructuring expenses.
Belisle said the results were better than expected and could be a sign that the credit losses the banks were expecting to incur due to declining oil prices may not be as large as first anticipated.
TD Bank (TSX:TD), CIBC (TSX:CM) and Royal Bank (TSX:RY) will report Thursday, while Scotiabank (TSX:BNS) is set to release its earnings next week.
On Wall Street, the Dow Jones industrial average soared 145.46 points at 17,851.51, the broader S&P 500 composite index advanced 14.48 points to 2,090.54 and the Nasdaq composite gained 33.83 points to 4,894.89.
In other commodities, the June gold contract fell $5.40 to US$1,223.80 an ounce and July copper contracts rose four cents to US$2.10 a pound. July natural gas gained four cents at US$2.18 per mmBTU.
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