Canada’s main stock index rose on Monday, led by energy shares, as investors returned from a long weekend to buy riskier assets that have been battered by concerns over a global economic slowdown.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 167.50 points, or 0.9%, at 19,028.86. Trading volumes were lower than usual as the United States celebrated the Fourth of July holiday.
The TSX was closed on Friday for Canada Day. The S&P 500 rose 1% that day, so some of Monday’s trading action was catching up with that move.
The energy sector gained 2.7% as crude oil rose more than 2% on concerns of tight supply amid lower OPEC output, unrest in Libya and sanctions on Russia.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 2.2%. That move came as copper prices fell to 17-month lows amid new COVID restrictions in top consumer China, in addition to slowing global manufacturing activity and a jump in metal inventories. Copper stocks in LME approved warehouses jumped 10,100 tonnes to 136,950 tonnes, up more than 20% over the past week.
Benchmark copper on the London Metal Exchange fell about 1% to $7,918 per tonne.
The TSX fell 13.8% in the second quarter, its biggest quarterly decline since the first quarter of 2020, on fears that harsh steps by major central banks to tame inflation will cause an economic downturn.
In currency markets, the Canadian dollar strengthened against its U.S. counterpart, as oil prices rose and a Bank of Canada survey showed a surge in inflation expectations that bolstered bets for a supersized interest rate increase next week by the central bank.
Consumer inflation expectations hit fresh highs in the short-term and were up “significantly” over the long-term, the BoC survey showed.
Money markets expect the BoC to raise its benchmark rate by three-quarters of a percentage point at its next policy decision on July 13, which would be its biggest hike in 24 years.
Separate data showed that Canadian manufacturing activity lost some momentum in June as inflation pressures and material shortages held back production and firms became less optimistic about future output.
The S&P Global Canada Manufacturing Purchasing Managers’ Index fell to a seasonally adjusted 54.6, its lowest level since January 2021, from 56.8 in May.
The Canadian dollar was trading 0.2% higher by late afternoon at 1.2853 to the greenback, or 77.80 U.S. cents, after moving in a range of 1.2838 to 1.2902.
The Canadian 10-year government bond touched its lowest since June 7 at 3.162% before recovering slightly to 3.177%, down 4.8 basis points on the day.
Reuters, Globe staff
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