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(Frank Gunn/THE CANADIAN PRESS)
(Frank Gunn/THE CANADIAN PRESS)

At the open: TSX starts higher as oil jumps Add to ...

Canada’s main stock index opened higher on Wednesday after oil prices rose to near $40 per barrel as a weaker dollar spurred interest in riskier assets.

The S&P TSX index was up 0.62 per cent, or 82.78 points, to 13,509.01 in early trading

Canada’s main stock index rose on Tuesday, reversing earlier losses as dovish comments from Federal Reserve Chair Janet Yellen helped support gold mining stocks.

U.S. stocks opened higher on Wednesday, a day after Federal Reserve Chair Janet Yellen’s remarks soothed concerns over the pace of interest rate hikes this year.

The Dow Jones industrial average was up 65.2 points, or 0.37 per cent, at 17,698.31, the S&P 500 8.03 points, or 0.39 per cent, at 2,063.04 and the Nasdaq Composite index 27.77 points, or 0.57 per cent, at 4,874.39.

Ms. Yellen, who made her first remarks since the Fed’s meeting earlier this month, said inflation in the United States had not yet reached sustainable levels amid risks posed by uncertainty about China’s economy and low oil prices.

Ms. Yellen’s stance contrasts with recent comments from other policymakers who have voiced support for more than one increase this year.

Global markets cheered Ms. Yellen’s remarks, which suggested that a rate hike was not immediately on the horizon. The dollar fell more than a percent, while bond prices rallied.

“Yellen’s comments allowed investors to breathe a sigh of relief that the Fed will not be raising rates in April,” said Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence in New York.

Mr. Stovall said the Fed would focus on data to see whether a hike in June would be possible.

Data on Wednesday showed the U.S. private sector added 200,000 jobs in March, more than the 194,000 expected. The report, by payrolls processor ADP, serves as a precursor to the more comprehensive nonfarm payrolls data on Friday.

Wall Street rose on Tuesday, with the S&P 500 moving back in to positive territory and closing at its highest level for the year.

Oil futures edged up on Wednesday to near $40 per barrel as a weaker dollar spurred interest in riskier assets and the International Energy Agency said expectations for a deluge of oil from Iran were misplaced.

Brent futures climbed 71 cents to $39.85 a barrel after settling down $1.13 in the previous session.

U.S. crude rose 77 cents to $39.05 a barrel after ending Tuesday down $1.11.

The dollar index fell, after slipping to an eight-day low in the previous session on dovish comments by U.S. Fed Chair Janet Yellen about possible interest rate rises.

A weaker dollar makes greenback-denominated commodities cheaper for holders of other currencies.

“One of the main reasons for Yellen’s dovish stance is the low oil price and she made a direct reference to it,” said Olivier Jakob from Petromatrix consultancy.

“For Yellen, low oil prices are not only contributing to low inflation expectations but they are a threat to global economic growth due to the financial stress they are imposing on oil-producing economies,” Jakob said.

Oil prices fell about 3 per cent in the previous session after Kuwait and Saudi Arabia said they would resume production at the jointly operated 300,000-barrels-per-day Khafji field even as oil producers plan to meet on April 17 to consider an output freeze.

“The fact that the announcement comes so shortly before the meeting in Doha is a disastrous sign. After all, it gives the impression that the lip service paid to freezing oil production is nothing but hot air,” Commerzbank analysts said in a note.

The freeze idea emerged after prices fell below $30 a barrel in January from as high as $115 in June 2014 on global oversupply spurred by U.S. production growth and rising output from oil exporter group OPEC.

The International Energy Agency, which oversees energy policies of industrialized nations, forecasts the global stock build to continue this year.

But it said on Wednesday Iran was not adding as many barrels into the market as expected despite the easing of international sanctions against Tehran in January.

“It was misleading to believe that there would be a huge amount of new Iranian crude and natural gas production entering the market in the short term,” Fatih Birol, the IEA’s executive director, told Reuters.

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