Canada’s main stock index rose on Thursday, rebounding from a two-week low the day before, as optimism that global economic recovery will continue supported the outlook for resource and other cyclical stocks.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 32.54 points, or 0.15%, at 21,072.02, after Wednesday’s close was the lowest since Dec. 21.
The gain came as data showed Canadian exports climbing to a record high, helped by the seventh straight monthly increase in energy exports.
“I am positive on the resources ... global growth is still strong,” said Steve Palmer, founding partner and chief investment officer at AlphaNorth Asset Management.
“If the resources are strong, it’s a good sign the Canadian market will perform.”
Energy, financials and other cyclical sectors, which tend to particularly benefit from a pickup in economic growth, account for more than 70% of the Toronto market.
Energy advanced 3%, helped by higher oil prices, while financials ended 0.8% higher.
U.S. crude oil futures settled 2.1% higher at $79.46 a barrel, but gold fell more than 1% after minutes of the Federal Reserve’s latest meeting on Wednesday signaled the possibility of faster-than-expected U.S. interest rate hikes.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 2.7%, while technology extended this week’s decline, falling 1.2%.
Some of the selling of technology shares this week could be linked to tax-planning purposes.
“People have waited to defer the capital gains to 2022, so they held off selling the winners,” Palmer said.
On Wall Street, the S&P 500 ended a volatile session close to unchanged, as technology shares fell but financials lent support a day after the market sold off on the hawkish slant in Federal Reserve minutes.
The S&P 500 financials index rose 1.6%, extending this week’s strong gains. Other economically sensitive sectors also advanced. Energy gained 2.3% and is up more than 9% since Dec. 31.
Banks were among top performers among financials, with the S&P 500 bank index up 2.6% following a rise in the benchmark U.S. 10-year Treasury yield, which touched its highest level since April 2021. Higher interest rates can increase profit margins for banks and financial firms.
Shares of Meta Platforms jumped 2.6%, the biggest boost to the S&P 500 and Nasdaq.
The Dow ended down 0.5% and the heavily weighted S&P 500 technology sector also eased 0.5%. The tech sector was biggest drag on the S&P 500 on Wednesday when minutes from the Fed’s December meeting signaled the possibility of sooner-than-expected interest rate hikes.
The Fed minutes cited a “very tight” job market and unabated inflation, increasing investor unease ahead of Friday’s monthly jobs report from the U.S. Labor Department.
“We have a jobs report tomorrow, which continues to be a focal area for the market in terms of the progression of the labor market,” said Bill Northey, senior investment director at U.S. Bank Wealth Management.
A private payrolls report on Wednesday was stronger than expected.
The Dow Jones Industrial Average fell 170.64 points, or 0.47%, to 36,236.47, the S&P 500 lost 4.53 points, or 0.10%, to 4,696.05 and the Nasdaq Composite dropped 19.31 points, or 0.13%, to 15,080.87.
Investors this week have mostly rotated out of technology-heavy growth shares and into more value-oriented stocks that tend to do better in a high interest-rate environment.
The S&P 500 value index was up 0.1% on Thursday compared with a 0.3% decline in its growth counterpart.
Netflix Inc ended down 2.5% after J.P. Morgan cut its price target on the movie streaming platform’s stock.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose last week. Separately, U.S. services industry activity slowed more than expected in December, but supply bottlenecks appeared to be easing.
Advancing issues outnumbered declining ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favored decliners. The S&P 500 posted 32 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 78 new highs and 492 new lows. Volume on U.S. exchanges was 11.10 billion shares, compared with the 10.4 billion average for the full session over the last 20 trading days.
Reuters, Globe staff
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