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Canada’s main stock index sat flat on Wednesday, as oil prices hit 3-1/2-year highs after President Donald Trump pulled the United States out of an international nuclear deal with Iran.

At 11:28 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index rose 1.21 points, or 0.01 per cent, to 15,843.99.

The U.S. withdrawal from the deal with Iran cast uncertainty over global oil supplies at a time when the crude market is already tight.

The energy sector, the biggest boost to the main index, was up 1.8 per cent.

Enbridge Inc. gained 2 per cent after the pipeline operator said it will sell a 49-per-cent stake in some of its renewable power assets in order to reduce its massive debt, pushing the energy group higher.

Also helping the sentiment was progress made on the NAFTA front, as Mexico has launched a counterproposal to U.S. demands to toughen automotive industry content rules under the Agreement, officials said on Tuesday.

Six of Canada’s 10 main index sectors were lower.

The largest percentage gainer on the TSX was Maxar Technologies Ltd., which rose 10 percent after the company’s quarterly results topped analysts’ estimates.

Kinross Gold Corp., the largest decliner, was down 12.4 percent after the company reported first-quarter results on Tuesday.

Shares of Sun Life Financial Inc. were down 1.3 per cent after the insurance company reported its quarterly results on Tuesday.

Wall Street was higher on Wednesday, with energy shares getting a boost from a surge in oil prices after President Donald Trump pulled the United States out of a nuclear deal with Iran.

The S&P energy index rose 1.9 per cent after oil prices hit their highest levels in 3-1/2 years as investors worried that Trump’s decision would increase risks of conflict in the Middle East and curtail oil supplies in a tight market.

The energy sector has risen more than 10 per cent so far in the quarter, far outperforming the other major S&P indexes.

However, a 3.5 percent drop in Walmart limited gains on the Dow after the retailer took a majority stake in Indian e-commerce firm Flipkart for about $16 billion.

“Oil is probably not helping, it’s a kind of a potential inflation indicator,” said Mark Travis, chief executive officer of Intrepid Capital Funds in Jacksonville Beach, Florida.

“The underlying challenge for the financial markets is not so much whether Trump does or doesn’t do anything. It is the impact of the rates rising facing an expensive capital markets.”

The U.S. 10-year Treasury yield rose to a two-week high and above the key 3-per-cent level on expectations of higher interest rates.

The Dow Jones Industrial Average was up 18.37 points, or 0.08 per cent, at 24,378.58, the S&P 500 was up 7.16 points, or 0.27 per cent, at 2,679.08 and the Nasdaq Composite was up 9.96 points, or 0.14 per cent, at 7,276.87.

Six of the 11 major S&P sectors were higher, with the financial sector’s 0.6-per-cent rise providing the second biggest boost to the benchmark index.

The yield-sensitive utilities and telecom services were down about 0.7 per cent each.

Walt Disney dipped 2.1 per cent. The media company, which is in the process of buying film and TV assets from Twenty-First Century Fox, reported quarterly profit that topped Wall Street forecasts.

Oil prices rose more than 2 per cent on Wednesday, climbing to near 3-1/2 year highs, after Mr. Trump abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member.

Ignoring pleas by allies, Mr. Trump on Tuesday pulled out of a 2015 international deal with Iran, making investors nervous about rising risks of conflict in the Middle East and about oil supplies in a tight market.

The United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached.

Brent crude futures rose $2.02 to $76.87 a barrel, a 2.7-per-cent gain. The session high of $77.43 a barrel was the highest since November 2014.

U.S. West Texas Intermediate (WTI) crude futures rose 2.6 per cent, or $1.79 to $70.85 a barrel.

Prices extended gains after U.S. Energy Information Administration data showed domestic crude inventories fell 2.2 million barrels in the latest week, far exceeding forecasts for a decrease of 719,000 barrels.

The EIA report helped lift U.S. gasoline futures to $2.1674 a gallon, the highest since Hurricane Harvey sent prices surging in August. U.S. heating oil futures surged to $2.2258 a gallon, the highest since Feb. 2015.

Crude stocks at the Cushing, Oklahoma, delivery hub rose 1.4 million barrels, EIA said.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on its nuclear program. The country, the third-biggest producer of crude within the Organization of the Petroleum Exporting Countries, exported about 2.6 million barrels per day (bpd) in April.

Analysts’ estimates of the possible reduction in Iranian crude supplies as a result of any new U.S. sanctions range from 200,000 bpd to 1 million bpd.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 22/05/24 4:00pm EDT.

SymbolName% changeLast
ENB-T
Enbridge Inc
-0.16%50.12
DIS-N
Walt Disney Company
+0.01%103.02
SLF-T
Sun Life Financial Inc
-0.63%69.47
K-T
Kinross Gold Corp
-3.39%10.83

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