TORONTO – Oil prices clawed their way back above US$40 a barrel Wednesday, helping the Toronto stock market and the Canadian dollar settle into positive territory.
The S&P/TSX composite index added 35.04 points at 14,512.05, with the energy sector registering the most gains.
The September crude contract for West Texas Intermediate oil was up $1.32 at US$40.83 per barrel after settling on Tuesday below US$40 for the first time since April.
The higher oil prices helped the loonie edge up, as the currency jumped 0.19 of a cent to 76.51 cents US.
Markets analyst John Stephenson said although it’s positive that crude erased some of its recent losses, he expects prices to stay close to the US$40 range for some time.
“It just shows that the market is oversold in the short run,” said Stephenson, president and CEO at Stephenson & Company Capital Management.
“Right now, we still have far too much supply and not enough demand.”
He noted that some factors that have driven up oil prices as of late have subsided including the stoppages due to the Fort McMurray, Alta., wildfires and instability in Nigeria. Even so, the global economic outlook is by no means rosy.
“All around the world, it is just looking a little more gloomy,” said Stephenson.
But the gloom wasn’t enough to bring Wall Street down, after it found support from a payrolls survey by ADP that showed private U.S. payrolls grew by 179,000 in July. The survey attributed the gain to hiring done by retailers and shipping firms, and suggested that employers continued to hire new workers at a faster pace than they were this spring, when hiring slowed sharply.
Still, economic growth in the U.S. has been sluggish this year and signs indicate there aren’t many available workers to fill jobs.
Investors are awaiting two important jobs reports due out on Friday from Canada and the U.S. that could have the potential to drive stock markets higher or lower depending on their results.
In the U.S., economists forecast that the government’s jobs report, which includes hiring by government as well as private companies, will show a gain of 175,000 jobs.
These movements may be felt more acutely because it’s the middle of summer, which is a typically quiet trading period.
“In general, the markets are weak in August. It’s a widely-held opinion,” said Stephenson. “It’s the dead of summer, people are on holidays and not around, and there’s less trading volumes on major markets.”
In New York, the Dow Jones industrial average advanced 41.23 points at 18,355, the broader S&P 500 composite index jumped 6.76 points to 2,163.79 and the Nasdaq composite gained 22.01 points to 5,159.74.
Elsewhere in commodities, the December gold contract fell $7.90 to US$1,364.70 an ounce, while September natural gas was up 11 cents at US$2.84 per mmBTU. The September copper contracts declined a penny to US$2.20 a pound.
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