Canada’s main stock index was flat on Monday as energy shares were boosted by a surge in crude prices after Saudi Arabia and Russia ruled out any immediate increase to oil production despite calls by U.S. President Donald Trump for action to raise global supply.
Oil prices jumped more than 2 per cent to a four-year high on Monday.
The Organization of the Petroleum Exporting Countries and non-OPEC states, including top producer Russia, gathered in Algiers on Sunday for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.
“The market’s still being driven by concerns about Iranian and Venezuelan supply,” said Gene McGillian, director of market research at Tradition Energy in Stamford. “The failure of the producers to address that adequately this weekend is creating a buying opportunity.”
Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing to $80.62. U.S. light crude was $1.43, or 2 percent, higher at $72.21.
The TSX energy sector was 1.7 per cent with Imperial Oil Ltd. and Cenovus Energy Inc. both rising 2.7 per cent.
Barrick Gold Corp., up 5.8 per cent, was the top boost to materials stocks after the company agreed to buy Randgold Resources in an $18.3-billion share deal to create the world’s largest gold company by value.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.4 per cent.
Gold prices were steady partly due to a dip in the dollar, but activity was muted as investors awaited a U.S. central bank meeting this week that is expected to result in an interest rate increase.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 2.89 points, or 0.02 per cent, at 16,225.43.
Still, seven of the index’s 11 major sectors were lower. The consumer discretionary sector’s 1.1-per-cent drop was the steepest.
Aurora Cannabis Inc. was up 2.9 per cent, while rivals Canopy Growth Corp. and Aphria Inc. sat up 3.3 per cent and 2.4 per cent, respectively.
Stock markets around the world retreated on Monday amid concerns over the potential wider impact of a trade spat between China and the United States, while oil prices rallied to a four-year high after OPEC ignored U.S. calls to raise supply.
Wall Street equities tumbled after the Axios news site reported that U.S. Deputy Attorney General Rod Rosenstein had verbally resigned to White House Chief of Staff John Kelly, in anticipation of being fired by President Donald Trump. Other media sites had similar reports.
The Dow Jones Industrial Average fell 142.46 points, or 0.53 per cent, to 26,601.04, the S&P 500 lost 9.7 points, or 0.33 per cent, to 2,919.97 and the Nasdaq Composite dropped 8.01 points, or 0.1 per cent, to 7,978.95.
MSCI’s gauge of stocks across the globe shed 0.46 per cent.
U.S. Treasury yields across maturities briefly fell by around two basis points after the report about Rosenstein, who overseas the federal investigation into Russia’s role in the 2016 U.S. election and had reportedly suggested secretly recording Trump.
Yields ticked back up, however. The benchmark 10-year notes last fell 3/32 in price to yield 3.0796 per cent, from 3.068 per cent late on Friday.
The benchmark index for euro zone blue chip stocks retreated 0.62 per cent, while the pan-European STOXX 600, which also includes stocks in Britain and outside the European Union, was down 0.6 per cent.
Europe had followed Asia lower, with MSCI’s broadest index of Asia-Pacific shares outside Japan closing 1.1 per cent lower, while Japan’s Nikkei rose 0.82 per cent.
China and the United States, the world’s two biggest economies, imposed fresh tariffs on each other’s goods on Monday, showing no signs of backing down from an increasingly bitter trade dispute that is expected to knock back global economic growth.
“This is here to stay,” said Adrien Dumas, a manager at Mandarine Gestion in Paris, arguing that because trade is at the core of the Trump administration’s agenda, investors should accept that the issue is unlikely to recede any time soon.
“It’s a negative and it adds to other issues,” he said, pointing to stress in emerging markets or political risk in Italy and Britain.
A worsening trade environment is also likely to exacerbate diverging economic performance and policy rates between different regions, Citi analysts said in a note on Monday.
“The U.S. economy is moving full steam ahead, bolstered by pro-cyclical policies, while others are lagging,” they said.
Brexit, or Britain’s exit from the European Union, weighed on sentiment. On Friday, British Prime Minister Theresa May said talks with the EU had hit an impasse.
British opposition leader Jeremy Corbyn said on Sunday he would support a second Brexit referendum if his Labour Party backs the move, heaping more pressure on May, amid speculation that she could opt to call a snap parliamentary election.
European Central Bank chief Mario Draghi said he expected a vigorous pickup in euro zone inflation, backing moves toward unwinding an ECB asset purchase program meant to stimulate the economy. That drove the euro to more than a three-month high against the dollar.
The dollar index, tracking it against a basket of other major currencies, fell 0.18 per cent.