TORONTO — Canada's main stock index moved past a one-day blip to resume its upward trend as crude oil approached US$60 a barrel.
The S&P/TSX composite index closed up 67.22 points to 18,460.21. It gained 1.8 per cent on the week and is running 6.5 per cent higher halfway through February.
In New York, the Dow Jones industrial average was up 27.70 points at 31,458.40, the S&P 500 index was up 18.45 points at 3,934.83, while the Nasdaq composite was up 69.70 points at 14,095.47.
The rally of cyclical sectors like industrials, energy, financials and materials continued Friday.
"We're still seeing on a weekly and monthly basis the bulk of the cyclicals of the TSX index are the drivers of the returns," said Sid Mokhtari, executive director of institutional equity research at CIBC.
The rally has created overbought conditions, especially for industrials, energy and the cannabis part of health care, that could lead to pullbacks.
"Naturally I do believe that there's risk to the market more of a mean reversion as you go forward than anything else," he said in an interview.
After losing 17.4 per cent on Thursday, health care dipped another 0.3 per cent Friday with Aurora Cannabis Inc. off 13.7 per cent.
Energy gained 2.2 per cent as crude oil prices continued to rise, pushing Vermilion Energy Inc. up 5.9 per cent and Crescent Point Energy Corp. 3.8 per cent.
The March crude contract was up US$1.23 to US$59.47 per barrel and the March natural gas contract was up 4.4 cents at $2.91 per mmBTU.
The TSX has climbed owing to oil prices gaining 4.6 per for the week and 14 per cent in February.
Mokhtari said oil is likely to reach resistance at US$61 to US$63 a barrel.
"So I think that's an area where we assume oil should be able to pause and consolidate."
Crude is being helped by expectations that global demand will improve as the economy recovers in the second half of the year, and Saudi Arabia cutting output.
The Canadian dollar traded for 78.67 cents US compared with 78.83 cents US on Thursday.
Industrials rose 1.4 per cent as Air Canada shares increased 5.3 per cent despite losing $4.65 billion last year. The federal government approved its $190-million purchase of Transat A.T., which must still receive approval by European regulators.
Canada's big railways also did well, with CP Rail's shares climbing 2.8 per cent and Canadian National Railway up 2.3 per cent.
The heavyweight financials sector was a little higher, but has been helped by strong quarterly results from insurance companies ahead of banks reporting.
"I would say in our estimation we have to assume that financials are probably the right area still and that's probably going to continue to perform well as the yield market continues to gradually rise," said Mokhtari.
Materials was slightly higher despite lower gold prices.
This report by The Canadian Press was first published Feb. 12, 2021.
Companies in this story: (TSX:AC, TSX:VET, TSX:CPG, TSX:CP, TSX:CNR, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press