Shopify surges to push TSX within hair of record high, loonie at three-year high

·4 min read

TORONTO — Canada's main stock index set a record high midweek on renewed optimism for a rapid economic recovery that pushed the loonie to its strongest level in more than three years.

"The energy sector was among the top-performing sectors given today's rally in crude prices, while the Canadian technology sector saw some outsized gains following the release of Shopify’s stronger-than-expected earnings results," said Candice Bangsund, portfolio manager for Fiera Capital.

The S&P/TSX composite index closed up 181.86 points to 19,356.95 after hitting an intraday high of 19,403.54.

Technology, health care and energy each climbed by more than three per cent.

Shopify shares rose 11.1 per cent to $1,589.47 after the Ottawa-based e-commerce firm beat expectations with higher first-quarter profits as revenues surged 110 per cent to US$988.6 million.

Health care was helped by a nine per cent gain by cannabis producer Organigram Holdings Inc. and 8.8 per cent by Aphria Inc.

The key energy sector moved up as crude oil prices rose for nearly five-per-cent gain since Monday morning amid new signs of a recovering economy. The increase came despite OPEC moving to gradually increase output beginning in May and U.S. crude inventories rising.

"Oil prices advanced to a one-month high after the OPEC consortium expressed confidence in the outlook for global demand as vaccination rates accelerate," Bangsund wrote in an email.

That came despite severe COVID-19 virus trends in India that may weigh on near-term energy consumption from the world's third-largest oil user.

The June crude oil contract was up 92 cents at US$63.86 per barrel and the June natural gas contract was up 1.8 cents at US$2.96 per mmBTU.

Shares of MEG Energy Corp., Crescent Point Energy Corp. and Vermilion Energy Inc. increased 7.3, 6.9 and 6.3 per cent, respectively.

The Canadian dollar traded for 80.93 cents US compared with 80.63 cents US on Tuesday.

Earlier in the day, the loonie surpassed 81 cents for the first time since January 2018 after Canadian retail sales data revealed a sharp rebound in consumer spending February.

"(It) demonstrated Canada's resilience in the wake of the pandemic, while higher crude prices also buttressed the loonie," Bangsund added.

Statistics Canada said that retail sales rose 4.8 per cent to $55.1 billion in February, while core retail sales — which exclude gas stations and motor-vehicle and parts dealers — climbed 3.8 per cent in February, the first increase in three months.

It also said that its preliminary estimate for March suggested a gain of 2.3 per cent for the month, but cautioned the figure would be revised.

In New York, the Dow Jones industrial average was down 164.55 points at 33,820.38. The S&P 500 index was down 3.54 points at 4,183.18 after setting an intraday record, while the Nasdaq composite was down 39.19 points at 14,051.03.

Materials and financials were also higher on the day.

Copper extended its rally to set the highest prices in a decade, while gold prices fell after the Federal Reserve downplayed rising inflation.

The June gold contract was down US$4.90 at US$1,773.90 an ounce and the July copper contract was up 1.2 cents at nearly US$4.50 a pound.

The U.S. central bank reiterated that it's in no hurry to tighten monetary policy unlike the Bank of Canada.

The Federal Reserve kept its ultra-low interest rate policy in place despite increasing evidence of a strengthening economic recovery.

In a statement Wednesday, the Fed expressed a brighter outlook, saying the economy has improved along with the job market. And while the policy-makers noted that inflation has risen, they ascribed the increase to temporary factors.

The Fed also signalled its belief that the pandemic's threat to the economy has diminished, a significant point given chairman Jerome Powell's long-stated view that the recovery depends on the virus being brought under control.

"The underlying message from the Fed was one of unrelenting policy support, which when combined with massive fiscal spending revitalized the reflationary trade and saw equity markets edge higher on the day," said Bangsund.

Meanwhile U.S. President Joe Biden will discuss his latest spending proposal in a joint session of Congress. He aims to pay for the US$1.8 trillion in additional spending with higher taxes on the wealthy, although Bangsund noted it remains to be seen if the proposal will pass through the closely divided Congress.

This report by The Canadian Press was first published April 28, 2021.

— With files from The Associated Press.

Companies in this story: (TSX:SHOP, TSX:OGI, TSX:APHA, TSX:MEG, TSX:CPG, TSX:VET, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press