TORONTO — Canada’s main stock index hit a record close as investors welcomed the U.S. Federal Reserve’s interest rate guidance and commodities resumed their upward trajectory as part of a broad-based rally.
The S&P/TSX composite index gained 302.39 points to end Thursday at 21,771.22. It reached an intraday high of 21,772.52 that was nearly 21 points short of its November all-time high.
The Toronto market is up 2.6 per cent year-to-date. U.S. stock markets also rallied but remain down in 2022.
The Dow Jones industrial average was up 417.66 points at 34,480.76 but is off 6.4 per cent so far this year. The S&P 500 index was up 53.81 points at 4,411.67 but is down 8.6 per cent for the year, while the Nasdaq composite was up 178.23 points at 13,614.78 but remains in correction territory, down 14.3 per cent this year.
The initial reaction to the hawkish tone from the Fed that accompanied Wednesday’s quarter-point rate hike was negative. But sentiment warmed after chairman Jerome Powell said the plan for six additional hikes this year wasn’t set in stone.
“Markets rallied significantly into the close and continued that today,” said Macan Nia, co-chief senior investment strategist at Manulife Investment Management.
He said markets accelerated Thursday on expectations that the central bank will proceed with fewer than six increases and also in response to Powell’s comments on how strong the U.S. economy is and how tight the labour market has been.
“You can also build a positive case that yes, rates will be going up to combat inflation, but from the Fed’s view they believe that the economy is strong enough to withstand that,” he said in an interview.
All 11 sectors on the TSX were higher, led by energy, which gained 3.5 per cent as crude oil prices increased 8.6 per cent to return above US$100 per barrel.
The May crude oil contract was up US$8.06 at US$101.65 per barrel and the April natural gas contract was up 24.2 cents at US4.99 per mmBTU.
Shares of Advantage Oil & Gas Ltd. increased 6.0 per cent while Birchcliff Energy Ltd. was 5.8 per cent higher.
Energy was powered by doubts about a ceasefire between Russia and Ukraine. Crude prices had fallen after the two sides were in negotiations, but increased Thursday when it appeared Ukraine won’t agree to remain politically neutral.
“I anticipate as they continue to negotiate, oil will continue to be whipsawed because it’s going to be driven by the outcomes or how investors perceive the outcome of these negotiations,” said Nia.
The Canadian dollar traded for 79.05 cents US compared with 78.61 cents US on Wednesday, according to the Bank of Canada.
Technology increased 2.7 per cent with Lightspeed Commerce Inc. surging 15.9 per cent on the day. The Montreal-based company’s shares are down 31.6 per cent year-to-date and 78.9 per cent below its record high last September. Shopify Inc. increased five per cent.
Materials was up 2.6 per cent on higher metals prices with Oceanagold Corp. up 7.6 per cent and New Gold Inc. 6.0 per cent higher.
The April gold contract was up US$34.00 at US$1,943.20 an ounce and the May copper contract was up 10.2 cents at US$4.70 a pound.
Nia said technology and materials also rose on investor belief that the Fed won’t increase interest rates another six times this year.
“Information technology is also just highlighting, similar to gold, that the market generally is looking at this six rate hike expectation by the Fed to be maybe not as concrete as one might think.”
This report by The Canadian Press was first published March 17, 2022.
Companies in this story: (TSX:SHOP, TSX:LSPD, TSX:AAV, TSX:BIR, TSX:OGC, TSX:NGD, TSX:GSPTSE, TSX_CADUSD=X)
