Canada’s main stock index rose on Wednesday in a broad-based rally led by shares of energy companies as oil recouped some of its early losses, while the Canadian dollar weakened after the Bank of Canada held borrowing costs steady in an interest rate meeting.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 138.21 points, or 0.9 per cent, at 15,201.80.
Ten of the index’s 11 major sectors were higher, led by the energy sector, which climbed 2 per cent as oil prices rose before a meeting of the world’s biggest exporters to discuss cutting output to help shore up prices and curb excess supply.
Canadian energy companies also cheered Alberta’s decision to mandate output cuts to reduce a supply glut. Canadian Natural Resources Ltd. was up 3.9 per cent, while Suncor Energy Inc. jumped 2.8 per cent.
The materials sector, which includes precious and base metals miners, added 0.8 per cent despite gold prices edging lower, a day after hitting their highest level in more than five weeks. Nutrien Ltd. rose 3.2 per cent, while Teck Resources Ltd. sat up 2.7 per cent.
Marijuana producers pushed health care stocks lower by 2.5 per cent in morning trading. Aphria Inc. lost 11.4 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. were down 6.5 per cent and 4.4 per cent, respectively.
Roots Corp. shares slumped to a record low on Wednesday after reporting a 44 percent drop in third-quarter profit and downgrading its sales and earnings targets for fiscal 2019. Shares of the company plunged as much as 29.3 per cent to $3.21, their lowest level since they began trading in October 2017. They were trading down 18.9 per cent.
The Canadian dollar weakened to one-and-a-half-year low against its U.S. counterpart on Wednesday as investors slashed expectations for further interest rate hikes from the Bank of Canada after a dovish interest rate announcement from the central bank.
The Bank of Canada kept its benchmark interest rate on hold at 1.75 per cent, as expected, and said there might be more room for non-inflationary growth, suggesting the pace of future hikes could be more gradual.
“From where we were last time out, things are a little bit more dovish in tone, and, not surprisingly we’ve seen the Canadian dollar weaken in the wake of that,” said Michael Gregory, a senior economist at BMO Capital Markets.
Chances of a hike in January slumped from about 60 per cent before the data to 36 per cent, the overnight index swaps market indicated.
The Canadian dollar was trading 0.8 per cent lower at $1.3377 to the greenback, or 74.76 U.S. cents. The currency touched its lowest since June 2017 at $1.3400.
The decline for the loonie came as global stocks were pressured by a renewal of worries about trade tensions and as the U.S. dollar strengthened against a basket of major currencies.
U.S. markets are closed to mark former President George H.W. Bush’s death, but the effect of Wall Street’s turmoil in the previous session, when New York-listed shares tumbled more than 3 percent, was felt in Asia and Europe.
That pushed MSCI’s all-country index down 0.4 per cent.
Tuesday’s declines came just a day after an equity surge driven by optimism that China and the United States would sort out their trade dispute. Then President Donald Trump threatened “major tariffs” on Chinese imports if his administration failed to reach an effective trade deal with Beijing.
“As I look into next year, most expectations for further gains have been pared back. Investors have gone from extended bullishness at the start of the year on equities to an uncomfortable neutrality,” said Paul O’Connor, head of multi-asset at Janus Henderson.
Oil prices rose more than 1 per cent on Wednesday ahead of a meeting of the world’s biggest exporters who will discuss cutting output to help shore up prices and curb excess supply.
The Organization of the Petroleum Exporting Countries, Russia and other producers will meet in Vienna this week to discuss a potential cut in production. Saudi Arabia has indicated it wants OPEC and its allies to cut output by at least 1.3 million barrels per day.
Russian Energy Minister Alexander Novak told reporters he had held a “good” meeting with his Saudi counterpart Khalid al-Falih on Wednesday and that they would have more talks.
OPEC is keen to avert the kind of build-up in global oil inventories that sent prices tumbling for more than a year and a half from late 2014. At the start of 2016, benchmark Brent was trading below $30 a barrel.
Brent crude futures rose 89 cents to $62.97 a barrel, a 1.4-per-cent gain. U.S. West Texas Intermediate (WTI) crude futures rose 82 cents to $54.07 a barrel, a 1.5-per-cent gain.
“The market is expecting that OPEC is going to announce production cuts,” said Regina Mayor, global and U.S. sector leader for energy at KPMG. “There has been quite a lack of discipline of late. When you look at U.S. shale production and Saudi production and Russia production, everyone has the pedal to the metal.”