S&P/TSX composite hits record high close on economic news; energy shares slide

·4 min read

TORONTO — Strong economic news from south of the border and optimism about the end of the pandemic drove Canada's main stock index to a record close in post-Easter trading on Monday, despite lower oil prices.

The S&P/TSX composite index closed up 36.47 points at 19,026.79 after setting a new intraday high of 19,064.88.

The U.S. government reported on Friday that employers went on a hiring spree in March, adding 916,000 jobs, the most since August.

Trader reaction was delayed until Monday because markets were closed for Good Friday. Investors were then further encouraged by a report Monday showing that the services sector in the U.S. had record growth in March as orders, hiring and prices surged.

In New York, the Dow Jones industrial average was up 373.98 points at 33,527.19. The S&P 500 index was up 58.04 points at 4,077.91, and the Nasdaq composite was up 225.49 points at 13,705.59.

"All this is positive, the market likes it, we're seeing a recovery. The reopening train is still moving forward and that's why the markets are higher today," said Allan Small, senior investment adviser at IA Private Wealth, in an interview.

"Overall, the data's looking really promising. They're having to hire back a lot of people a lot sooner than I think these companies actually anticipated and I believe we're also going to see this in our country."

He pointed out Delta Air Lines cancelled about 100 flights Sunday due to staff shortages amid higher than expected bookings and predicted Canadian airlines will eventually also see a faster than expected recovery due to pent-up demand.

In Toronto, seven of 11 sectors closed higher, led by materials sector members that mine copper or produce forest products.

The May copper contract was up 15 cents at nearly US$4.14 a pound, fuelling a 5.96 per cent increase in the shares of Era Copper Corp. and a 5.89 per cent lift for First Quantum Minerals Ltd.

Meanwhile forest product companies Canfor Corp. and Interfor Corp. rose on recent record high lumber and panel product prices to post increases of 3.65 per cent and 3.33 per cent, respectively.

At the other end of the spectrum was the energy sector, where companies followed the May crude oil contract down US$2.80 at US$58.65 per barrel and the May natural gas contract down almost 13 cents at US$2.51 per mmBTU.

Vermilion Energy Inc. closed down 5.81 per cent and Crescent Point Energy Corp. shares lost 5.31 per cent as the sector slumped by 2.46 per cent.

The strength of technology companies has been a welcome surprise, Small said, as the information technology sector eked out a small gain in Toronto, led by an 8.17 per cent gain by BlackBerry Ltd. and a 4.24 per cent rise in Tecsys Inc.

Technology powered much of the U.S. rally Monday, too, with the S&P 500 up 1.4 per cent at an all-time high after closing above the 4,000-point mark for the first time last Thursday and the Dow Jones Industrial Average also at a record high.

"Seeing tech rebound as hard as it has is quite promising," said Small.

He said he thinks the strength in stock markets will continue as more of the population is vaccinated, allowing more of the economy to reopen, although enthusiasm may wane in the second half of 2021 as life returns to normal and central banks and governments consider how to pay for their pandemic relief.

The Canadian dollar traded for 79.84 cents US on Monday compared with 79.59 cents US on Thursday.

The June gold contract was up 40 cents US at US$1,728.80 an ounce.

This report by The Canadian Press was first published April 5, 2021.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X, TSX:TCS, TSX:BB, TSX:ERO, TSX:FM, TSX:CFP, TSX:IFP, TSX:VET, TSX:CPG)

Dan Healing, The Canadian Press