TORONTO — Canada’s main stock index closed up along with U.S. markets despite a drop in the price of oil that pushed energy stocks down.
The S&P/TSX composite index closed up 153.29 points at 19,241.44 as the Bank of Canada’s 0.75 percentage point rate increase didn’t come with any surprises, said Jules Boudreau, economist at Mackenzie Investments.
The amount of the increase “was as close as you can get to perfectly priced in by market. So it didn’t end up moving markets too much over the day.”
The Bank of Canada did signal more rate hikes would be required to tame inflation, which had also been widely expected, said Boudreau. The main shift in messaging from the bank was the removal of referring to front-loading rate increases, indicating smaller rate hikes ahead.
With nothing from the bank to dampen investor sentiment, the S&P/TSX composite index rode the wider investor enthusiasm on the day that saw big gains in U.S. markets.
“It’s been mostly a day of risk-on in global markets. And that has an effect on Canadian markets in general. Every sector in the TSX is up except for energy, due to oil prices being down,” said Boudreau.
Financials saw a 1.2 per cent gain, information technology was up 2.3 per cent including 3.5 per cent for Shopify Inc., and industrials rose 1.6 per cent.
In New York, the Dow Jones industrial average ended up 435.98 points at 31,581.28. The S&P 500 index was up 71.68 points at 3,979.87, while the Nasdaq composite was up 246.99 points at 11,791.90.
There wasn’t a single driver to the gains, but the market climb came as bond yields pulled back after making fairly sharp gains in recent weeks, said Boudrreau.
“That pullback today gives a little bit of breathing room to every asset price around and as expected we’re seeing growth stocks outperform value stocks, both in the U.S. and in Canada.”
Energy stocks were the outlier of the day as the October crude contract ended down US$4.94 at US$81.94 per barrel and the October natural gas contract was down 30 cents at US$7.84 per mmBTU.
The drop in energy prices, which Boudreau said was likely tied to demand concerns out of China, pushed down the S&P/TSX energy index by 3.2 per cent, including a 3.7 per cent decline for Cenovus Energy Inc.
“There are struggles at Chinese refineries that have to shut down so that could explain this big chunky [drop] in oil prices.”
The lower energy prices also weighed on the loonie with the Canadian dollar trading for 75.96 cents US, down from 76.11 cents US on Tuesday.
The December gold contract was up US$14.90 at US$1,727.80 an ounce and the December copper contract was down three cents at US$3.43 a pound.
This report by The Canadian Press was first published Sept. 7, 2022.
Companies in this story: (TSX:GSPTSE, TSX_CADUSD=X)
