The close: Canada’s stock market rallies for a second week as crude hits two-month high

Canada’s main stock index rallied for a second week as the price of crude rose to its highest level in nearly two months.

The S&P/TSX composite index closed up 92.61 points, or 0.6 per cent, at 15,303.83.

The energy sector rose 0.75 per cent as oil prices rose about 3 per cent. Suncor gained 2.3 per cent, Encana was up 1.5 per cent and Cenovus Energy gained nearly 1 per cent.

Oil prices jumped about 3 per cent on Friday, rising after OPEC detailed specifics on its production-cut activity to ease global oversupply, and on signs of progress in ending the U.S.-China trade war.

Brent crude was up $1.52 to settle at US$62.70 a barrel, or 2.48 per cent. U.S. West Texas Intermediate (WTI) crude futures added $1.73 to settle at US$53.80 a barrel, or 3.32 per cent. The futures benchmarks posted their third straight week of gains, rising about 4 per cent since the close since the previous Friday.

The Organization of the Petroleum Exporting Countries released a list of oil production cuts by its members and other major producers starting on Jan. 1 2019 to boost confidence in its oil supply reduction pact.

Leading the TSX were Cronos Group Inc., up 8.7 per cent, NFI Group Inc., up 7.8 per cent, and Descartes Systems Group Inc, higher by 3.5 per cent.

Lagging shares were New Gold Inc., down 6.6 per cent, OceanaGold Corp., down 6.5 per cent, and Eldorado Gold Corp., lower by 5.6 per cent.

The top gaining sector was the tech sector, up 1.2 per cent, which health care stocks gained 1 per cent. Descartes rose 3.5 per cent and Aphria was up 3.4 per cent.

The Canadian dollar traded at an average of 75.41 cents US compared with an average of 75.22 cents US on Thursday following a pick up in the annual inflation rate in December to two per cent, topping expectations for a reading of 1.7 per cent. Financial shares rose 0.8 per cent.

U.S. stocks rallied on Friday, helping Wall Street’s major indexes advance for the fourth consecutive week, as increased hopes the United States and China would resolve their trade dispute lifted shares across sectors.

The market was boosted after a Bloomberg report said China sought to raise its annual goods imports from the United States by a combined value of more than US$1-trillion in order to reduce its trade surplus to zero by 2024.

The news followed a report on Thursday that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. A Treasury spokesman denied Mnuchin had made any such recommendation.

A strong rally in January has put the benchmark S&P 500 index on track for its best monthly gain since March 2016. The S&P 500 is now 8.9 percent below its Sept. 20 record close after dropping 19.8 percent below that level – near the 20-per-cent threshold commonly considered to confirm a bear market – on Christmas Eve.

“It’s risk-on again,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We’ve gotten an olive branch from China regarding trade. Obviously there’s been a very positive reaction from the market.”

The Dow Jones Industrial Average rose 336.25 points, or 1.38 per cent, to 24,706.35, the S&P 500 gained 34.75 points, or 1.32 per cent, to 2,670.71 and the Nasdaq Composite added 72.77 points, or 1.03 per cent, to 7,157.23.

For the week, the Dow rose 2.96 per cent, the S&P 500 gained 2.87 per cent, and the Nasdaq added 2.66 per cent. All three indexes registered their biggest four-week percentage gain since October 2011.

U.S. stock markets will be closed on Monday for the Martin Luther King Jr. holiday.

Industrial stocks rose 1.9 per cent, the second-most among the S&P 500’s major sectors, while the Philadelphia SE semiconductor index climbed 2.3 per cent. Both groups of shares have been sensitive to trade developments.

Technology stocks were the biggest boost to the S&P 500, rising 1.5 pe rcent.

Even with the session’s gains, relatively light trading volume during the week indicated some investors were still waiting on the sidelines. On Friday, volume on U.S. exchanges was 7.99 billion shares, compared to the 8.44 billion average over the last 20 trading days.

“A lot of people have liquidated their positions coming into earnings so that they can react quickly as earnings come out,” said Mark Otto, global market commentator at GTS in New York.

Analysts have lowered their fourth-quarter earnings forecast for S&P 500 companies to 14.2 percent year-over-year growth from 20.1 percent estimated on Oct. 1, according to IBES data from Refinitiv.

Shares of Schlumberger NV jumped 8.1 per cent after the oilfield services provider reported quarterly revenue that beat estimates.

Shares of Netflix Inc, however, fell 4 per cent after the video-streaming company forecast lower-than-expected revenue for the first quarter.

Reuters, The Canadian Press