Health care and technology sectors help lift TSX to another record high

·3 min read

TORONTO — Canada's main stock index continued to set records as it was pushed higher Tuesday by big cannabis stocks and an optimistic long-term outlook for the global economy.

The S&P/TSX composite index moved up 78.36 points to another record close of 18,408.62 after hitting an intraday high of 18,421.01.

Toronto's stock market rose for a seventh straight session to increase 6.2 per cent in February.

"The underlining mood in the market continues to be buoyant given the prospects for a massive fiscal spending package out of the U.S.," said Candice Bangsund, portfolio manager for Fiera Capital.

U.S. stock markets also hit intraday record highs before losing steam near close.

In New York, the Dow Jones industrial average was down 9.93 points at 31,375.83. The S&P 500 index was down 4.36 points at 3,911.23, while the Nasdaq composite was up 20.06 points at 14,007.70.

The market rally this month has also been driven by declining global COVID-19 cases and a ramp-up in vaccines.

The strong movement could naturally lead to investors taking a pause amid rising valuations that some view as being overheated, she said.

"The mood in the market is approaching euphoria," Bangsund said, in an interview.

"We could be due for a bit of a pullback, a healthy pullback from potentially overbought levels again as investors digest the near-term soft patch in economic data given the virus trends, but beyond the next few months, the outlook is looking much stronger."

However, she said large fiscal spending and unrelenting support from central banks could limit a possible correction.

"This is placing a floor under equity markets and so we may not necessarily see that five to 10 per cent correction given that level of support."

Health care was the big leader on the TSX, gaining 8.5 per cent, in part because of anticipation of U.S. legalization of cannabis.

Shares of Aphria Inc. surged 24.5 per cent and Canopy Growth Corp. rose 11.9 per cent.

Canopy's shares increased after the Ontario-based company announced it expects to be profitable in the second half of fiscal 2022 following dramatic restructuring.

Technology gained 1.3 per cent as shares of Shopify Inc. increased 6.1 per cent.

Industrials was helped by an 11.1 per cent increase by SNC-Lavalin Inc. after it announced the sale of its oil and gas business, and a 7.3 per cent lift for TFI International Inc. following strong quarterly results.

The energy and materials sectors lost some ground despite higher prices for crude oil and gold. Shares of Cenovus Energy Inc. and Whitecap Energy Inc. each fell by about 3.9 per cent.

Crude oil prices continued to climb on an improved outlook for global demand and caps on supply by OPEC.

"Oil has been on a tear," said Bangsund. "I think the energy sector has been one of the notable winners here in the month of February anyways."

The March crude contract was up 39 cents at US$58.36 per barrel and the March natural gas contract was down 4.7 cents at US$2.83 per mmBTU.

The Canadian dollar traded for 78.62 cents US compared with 78.41 cents US on Monday.

The April gold contract was up US$3.30 at US$1,837.50 an ounce and the March copper contract was up 5.4 cents at US$3.72 a pound.

This report by The Canadian Press was first published Feb. 9, 2021.

Companies in this story: (TSX:SHOP, TSX:TSX:SNC, TSX:APHA, TSX:WEED, TSX:CVE, TSX:WCP, TSX:TFII, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press