TORONTO – The Toronto stock market closed sharply higher Monday as the market started to claw back two weeks of losses ahead of the U.S. Federal Reserve meeting on interest rates this week.
The S&P/TSX composite index gained 131.26 points to 14,862.76, while the Canadian dollar gained 0.06 of a U.S. cent to 78.25 cents US.
The health care component of the Toronto market was up 1.65 per cent as Valeant Pharmaceuticals International appeared poised to win its takeover bid for Salix Pharmaceuticals with an improved offer of about US$11.1 billion.
The increased offer Monday prompted specialty drugmaker Endo International PLC to withdraw its rival bid for Salix. Valeant’s shares gained $6.13 or 2.4 per cent to $258.42.
U.S. indexes charged ahead after three weeks of losses with the Dow Jones Industrials ahead 228.11 points to 17,977.42, the Nasdaq was ahead 57.75 points to 4,929.51 while the S&P 500 index rose 27.79 points to 2,081.19.
The Fed meeting takes place Tuesday and Wednesday as traders speculate when the U.S. central bank may move rates up from near zero. A raft of positive economic news has persuaded many that the Fed will drop key language in its announcement that has said it would be “patient” in deciding when to hike rates. At the earliest, markets generally don’t expect the Fed to move before June.
The April gold contract was up 80 cents to US$1,153.20 an ounce and the gold sector was flat.
The TSX energy sector was negative as oil prices hit six-year lows in the wake of comments last week by the International Energy Agency that the recent stability in prices around the $50 mark was likely premature and that it might be overly optimistic to expect the rebalancing triggered by the collapse in prices to proceed smoothly.
The price of crude has plunged about 55 per cent since the highs of last summer amid a glut of global supply. Also rattling oil markets are concerns that crude inventories are at multi-year highs while storage space is running out.
“The fear is that a bunch of oil will be released into the marketplace and taking this down to the next level which could be perhaps below $40,” said Allan Small, senior adviser at HollisWealth.
“So, it seems that for whatever reason, people are waking up to the fact that there is a lot of oil in storage out there and room is running out and this is what people are focusing on.”
On Monday, the April crude oil contract on the New York Mercantile Exchange lost 96 cents to US$43.88 and the energy group slipped 0.2 per cent.
Ensign Energy Services Inc. (TSX:ESI) posted a quarterly net loss of $31 million or 20 cents a share as it recognized $89.5 million in non-cash charges for decommissioning and writing down assets — primarily oil and gas drilling rigs. Its shares declined 16 cents to $9.16.
The base metals component was down 0.85 per cent while the May copper contract was unchanged at US$2.67 a pound.