TORONTO – Higher oil prices boosted the loonie and North American markets Monday, as all three major U.S. indexes hit record highs.
The Toronto Stock Exchange’s S&P/TSX composite index gained 29.57 points to 14,777.02, led by base metals stocks, which were up 1.51 per cent, and energy companies, which gained 1.18 per cent.
The Canadian dollar also appeared to benefit from the boost in crude prices, gaining 0.27 of a U.S. cent to 77.42 cents US.
Expectations are mounting that OPEC could agree to freeze output when the 14-nation cartel meets next month, which has been providing some of the boost in oil prices more recently, said Edward Jones analyst Craig Fehr.
But “we’ve seen this before,” Fehr cautioned, referring to the OPEC meeting held in the Qatari city of Doha back in April.
“The expectation leading up to the meeting was that producers would organize a coordinated effort to freeze or even cut back on production, but we didn’t really see anything come from that,” he said.
“So I’d say it’s far from a guarantee at this point that any OPEC meeting would result in some coordinated effort.”
The September crude contract rose $1.25 to US$45.74 per barrel, while south of the border all three major indexes hit new records.
The Dow Jones industrial average added 59.58 points to close at 18,636.05, the broader S&P 500 composite index advanced 6.10 points to 2,190.15 and the Nasdaq composite was up 29.13 points to 5,262.02.
“We’re seeing some positive gains from markets around the world really being driven not only by the bounce in oil but also some increased optimism around the prospects of additional monetary policy stimulus from a lot of the central banks,” said Fehr.
“The combination of those two has really served to provide a bit of a boost to equity markets today.”
In economic news, the Canadian Real Estate Association said July marked the third consecutive month of lower home sales. The number of transactions fell 1.3 per cent between June and July, with more than half of the markets that the association tracks posting declines.
“That weakness is likely to continue to play out for quite some time,” said Fehr.
“Now we’re seeing weakness in sales — what we haven’t really seen is weakness in price appreciation. At this point we continue to see prices rise at a pretty strong clip in most of the major markets, so there is a bit of disconnect there.”
In commodity news, the December gold contract rose $4.30 to $1,347.50, September copper contracts rose one cent to US$2.15 a pound and September natural gas was unchanged at US$2.59 per mmBTU.
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