TORONTO — A broad rally Monday led by the energy and technology sectors lifted Canada’s main stock index, which is on track to end the volatile month of May in positive territory.
The S&P/TSX composite index increased 170.82 points to 20,919.40, its highest close since May 4 and a seventh straight day of gains.
“It seems like last week we finally broke this streak of weeks where the stock markets were losing,” said Vincent Tonietto, portfolio manager at Fiduciary Trust Canada.
The Toronto market also wasn’t affected by any significant news from the U.S. as its stock markets were closed for the Memorial Day holiday.
Continued easing by China on COVID-19 lockdowns helped to support Monday’s market increase.
Utilities was the lone sector on the TSX to fall. Energy led the 10 sectors that rose on the day. It climbed 2.4 per cent as crude oil prices continued to rise, helping to push Advantage Oil & Gas Ltd. up 6.2 per cent and Tamarack Valley Energy Ltd. 4.7 per cent higher.
The July crude oil contract was up US$2.10 at US$117.17 per barrel and the July natural gas contract was down 2.6 cents at US$8.70 per mmBTU.
Supporting the crude price increase were continued discussions by the European Union about a ban on Russian oil imports, Tonietto said in an interview.
Oil markets are also assuming that a meeting of OPEC plus Russia later this week won’t push supply higher.
“So any ban from the European Union would just put more pressure on other suppliers worldwide,” Tonietto said.
The Canadian dollar traded for 78.98 cents US compared with 78.51 cents US on Friday. It’s the highest level since April 21 and comes ahead of Wednesday’s Bank of Canada meeting when its key interest rate is expected to increase another 50 basis points.
Consumer discretionary was the second-best sector on the day, climbing 1.7 per cent and just ahead of technology. That sector’s increase was propelled by Hut 8 Mining Corp. gaining 11.3 per cent while Shopify Inc. and Lightspeed Commerce Inc. were up 3.8 and 3.4 per cent, respectively.
Tonietto said long duration stocks like technology are probably rallying on comments last week from central banks that they may not have to increase interest rates above 50 basis points.
“It gives a little bit more support to those stocks that have been really beaten down since the beginning of the year, and some of them are even lower than the pre-pandemic levels, so any signs that this selloff is ending might look like it is a relief rally or just a technical rebound.”
Materials was up slightly as bullion prices were flat. The August gold contract was unchanged at US$1,857.30 an ounce and the July copper contract was up 2.7 cents at US$4.33 a pound.
Tonietto said all eyes will be on the payroll data for May that’s coming out on Friday, in addition to ISM manufacturing numbers, Canadian GDP numbers on Tuesday and the Bank of Canada’s rate decision on Wednesday.
“A lot of data will have to be digested by the markets by the end this week.”
This report by The Canadian Press was first published May 30, 2022.
Companies in this story: (TSX:HUT, TSX:SHOP, TSX:LSPD, TSX:AAV, TSX:TVE, TSX:GSPTSE, TSX_CADUSD=X)
