Canada’s main stock index rose to a record high on Tuesday as the energy sector continued to gain on the back of rising oil prices.
At the closing bell, the Toronto Stock Exchange’s S&P/TSX Composite Index was up 96.38 points, or 0.59 per cent, at 16,548.72, beating the record high the market set on Monday. However, for the year the TSX is up only 1.4 per cent.
Nine of the index’s 11 major sectors were higher. The energy sector climbed 1.5 per cent, while the consumer staples sector gained 1.4 per cent.
The biggest gainer in the oil sector was Paramount Resource, up 7.1 per cent. Baytex Energy rose 4.9 per cent, and Husky Energy was up 2.5 per cent.
Oil prices were mixed on Tuesday, as price gains on supply concerns in Norway and Libya were tempered by the United States’ indication that it would consider requests for waivers from Iranian oil sanctions.
Brent crude futures gained 48 cents to US$78.55 per barrel. Earlier, the global benchmark hit a session high of US$79.51. U.S. crude futures were down 7 cents at US$73.78, after hitting a high of US$74.70.
In consumer staples, Alimentation Couche-Tard rose 6.7 per cent after the company’s earnings beat expectations and its CEO said it still planned to make further acquisitions. Maple Leaf Foods was up 0.5 per cent and Loblaw Co. gained 0.5 per cent.
Telecom Services gained 0.8 per cent and the consumer discretionary sector added 0.8 per cent.
Economic data showed the value of Canadian building permits rose in May, reversing a decline in the prior month, as strong intentions to build houses outweighed weakness in the non-residential sector.
Another piece of data showed Canadian housing starts surged in June, as groundbreaking on multiple unit urban homes jumped 46.4 per cent, offsetting a small decline in single detached urban starts.
The Canadian dollar slipped on Tuesday, and was trading near 76.20 cents US.
The Canadian dollar edged lower against its U.S. counterpart on Tuesday as investors awaited guidance on the economic outlook that could accompany a potential interest rate hike from the Bank of Canada on Wednesday.
Money markets see a greater than 90 per cent chance that the central bank will lift its policy rate by 25 basis points, to 1.50 per cent, which would be the fourth hike since last summer.
With a rate hike largely priced in, direction for the loonie could rest on the Bank of Canada’s outlook for the economy.
In the U.S., the S&P 500 extended recent gains to post its highest close since Feb. 1 on Tuesday as strong results from PepsiCo Inc. boosted optimism about the earnings season.
The Dow Jones Industrial Average rose 142.87 points, or 0.58 per cent, to 24,919.46, the S&P 500 gained 9.66 points, or 0.35 per cent, to 2,793.83 and the Nasdaq Composite added 3.00 points, or 0.04 per cent, to 7,759.20.
PepsiCo’s shares surged 4.8 per cent and were poised for their biggest one-day jump in nearly seven years after the company’s quarterly results topped estimates on strong sales of snacks. The company also reaffirmed its full-year forecast amid signs of a gradual recovery in its soda business.
The S&P consumer staples index was up 1.2 per cent, driven by the gain in PepsiCo. Coca-Cola was up 1.3 per cent.
Earnings are expected to become key for investors in the coming weeks as the U.S. reporting period kicks into high gear, shifting the focus away from trade tensions. The United States and China slapped tit-for-tat tariffs on US$34-billion of each other’s goods on Friday.
“They sold into it [the tariff news], and then it bounced back nicely, but it seems like it’s hitting a resistance area on the S&P 500 of 2,800,” said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.
“Now it’s maybe waiting until earnings on Friday for a catalyst.”
JPMorgan Chase, Wells Fargo and Citigroup are scheduled to report results on Friday. Their shares dipped on Tuesday after leading market gains on Monday.
Overall, S&P 500 companies are expected to post second-quarter profit growth of around 21 per cent, slightly higher than what was forecast in April, according to Thomson Reuters data.
However, investors and analysts will parse quarterly reports to gauge the impact of an escalating trade dispute between China and the United States on company earnings.
Higher oil prices lifted energy shares. The S&P energy index rose 0.8 per cent as crude oil prices gained on growing supply disruptions in Norway and Libya, but gains were pared after the United States said it would consider requests for waivers from Iranian oil sanctions.
Shares of Exxon and Chevron were up more than 1 per cent each. The S&P 500 utilities index was up 1 per cent, bouncing back from Monday’s losses.
Nordstrom dropped 2.8 per cent after the upscale department store operator issued a bleak sales forecast for the rest of 2018.
With files from Reuters