A broad rally on Monday, primarily led by the technology and energy sectors, has lifted S&P/TSX composite index, Canada’s main stock index, by 170.82 points to reach 20,919.40. It is good news because it’s the seventh day of gains in a row and even the highest close since May 4.
Vincent Tonietto, portfolio manager at
Fiduciary Trust Canada, stated, “It seems like last week we finally broke this
streak of weeks where the stock markets were losing.”
On Monday, Canada’s main stock index wasn’t
influenced by any news from the US, as the US stock markets were closed due to the
Memorial Day holiday. A key factor that led to the increase was the easing of
lockdowns in China.
The only sector that fell on TSX was
Utilities. About ten of the other sectors, led by the energy sector, rose on
Monday. The energy sector soared by 2.4% as crude oil prices rose. Major
players like Advantage Oil & Gas Ltd. and Tamarack Valley Energy Ltd. benefitted.
The former rose 6.2%, while the latter rose 4.7%.
The crude
price increase also happened due to continued discussions by the European
Union about banning Russian oil imports. Oil markets are also assuming that a
meeting between Russia and OPEC won’t push supply higher. Tonietto said, “So
any ban from the European Union would just put more pressure on other suppliers
worldwide.”
More Good News
There was more good news for Canadians. The
Canadian dollar traded for 78.98 cents US compared with 78.51 cents US on
Friday. This is the highest level since April 21, and the timing is crucial.
This change comes ahead of Wednesday’s Bank of Canada meeting. The key interest
rate is expected to increase another 50 basis points during that meeting.
Consumer discretionary was the second-best
sector on Monday as it rose 1.7%. The increase in this sector was propelled by
Hut 8 Mining Corp., which gained 11.3%. Shopify Inc. and Lightspeed Commerce
Inc. also rose by 3.8 and 3.4 % and helped boost the sector growth.
Tonietto said long-duration stocks like
technology are likely rallying on comments from central banks last week, which
mentioned that they might not have to increase interest rates above 50 basis
points. He stated, “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 rose slightly as bullion prices
were flat. The August gold contract remained unchanged at US$1,857.30 an ounce,
while the July copper contract was up 2.7 cents and reached US$4.33 a pound.
The Future Hope
Tonietto said that now people will be
watching for critical updates like the payroll data for May that’s coming out
on Friday, ISM manufacturing numbers, Canadian GDP numbers that
will be released on Tuesday, and the Bank of Canada’s rate decision that’s due
on Wednesday.
Sources:
https://ca.finance.yahoo.com/news/energy-tech-stocks-help-lift-153256384.html
https://www.thepeterboroughexaminer.com/ts/business/2022/05/30/energy-and-tech-stocks-help-lift-sptsx-composite-to-triple-digit-advance.html
https://financialpost.com/pmn/business-pmn/energy-and-tech-stocks-help-lift-sp-tsx-composite-to-triple-digit-advance