S&P/TSX composite outpaces U.S. markets in record run pushed by commodities sector

·3 min read

TORONTO — Canada's main stock index outpaced U.S. markets and pushed further into record territory amid a broad-based rally helped by the commodities sector.

The S&P/TSX composite index closed up 181.35 points to 19,745.47 after hitting an intraday record of 19,763.67.

The Toronto stock market is up 3.3 per cent so far in May and 13.3 per cent higher in 2021.

In New York, the Dow Jones industrial average was up 10.59 points at 34,323.05. The S&P 500 index was up 7.86 points at 4,195.99, while the Nasdaq composite was up 80.83 points at 13,738.00.

Wednesday's move was propelled by the energy and materials sectors and supported by gains in all 11 major sectors on the TSX.

Energy climbed 1.9 per cent as crude oil prices rose on expectations that the economic recovery will boost travel demand.

COVID-19 case counts in India are down almost in half from the peak a few weeks ago and more than half of U.S. adults are fully vaccinated.

"So this is reinforcing investor confidence in the reopening theme and perhaps the first real signs of this we'll be able to see will be this coming Memorial Day weekend," said Ryan Crowther, portfolio manager at Franklin Templeton Canada.

The July crude oil contract was up 14 cents at US$66.21 per barrel and the July natural gas contract was up 5.3 cents at US$3.03 per mmBTU.

Shares of Enerplus Corp. were up 4.2 per cent while Canadian Natural Resources Ltd. gained 3.1 per cent.

The Canadian dollar traded for 82.58 cents US compared with 82.94 cents US on Tuesday.

Higher gold and copper prices helped the materials sectors as Teck Resources Ltd. and Hudbay Minerals Inc. increased 5.7 and 4.7 per cent, respectively.

The August gold contract was up US$3.30 at US$1,903.80 an ounce and the July copper contract was up 2.3 cents at US$4.53 a pound.

Gold prices rose on further softening of bond yields while a BHP union is urging workers to launch a strike that could affect two mines in Chile that account seven per cent of global production.

Health care surged nearly four per cent on the day as shares of Aurora Cannabis Inc. rose 6.1 per cent.

Industrials was up on gains from Air Canada and Canadian National Railway Co.

BlackBerry Ltd. shares increased 10.5 per cent to push the Canadian tech sector higher.

The U.S. tech sector has been helped by a continuing decrease in U.S. bond yields.

Canada's heavyweight financials sector also increased with Bank of Montreal up 1.5 per cent following the release of its strong quarterly results with lower loan losses and a record high Tier 1 capital ratio. In fact, all big bank shares were in positive territory for the day.

"So when it comes to the banks everything is in place for buybacks and dividend increases to resume as soon as OSFI (Office of the Superintendent of Financial Institutions) is able to loosen their restrictions which have been in place since March 2020," Crowther said in an interview.

The Toronto stock market's new highs underscore the need for investors to be mindful of valuations, he said.

"There's still tons of opportunities out there but finding them requires research and good risk assessment, which is what we try to bring to the table."

This report by The Canadian Press was first published May 26, 2021.

Companies in this story: (TSX:ERF, TSX:CNQ, TSX:BMO, TSX:ACB, TSX:CNR, TSX:AC, TSX:BB, TSX:TECK.B, TSX:HBM, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press