North American stock markets set new records as crude oil surpasses US$60 per barrel

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TORONTO — North American stock markets set new records following the holiday Monday as the energy sector got a boost from crude oil, which surpassed US$60 a barrel to reach the highest level in more than a year.

The futures market started the day strong on anticipation that a big move in Europe on Monday would follow through in North America.

"We got a big open and it seems to have faded a little bit through the day but there's not a lot for investors to really worry about right now," said Greg Taylor, chief investment officer of Purpose Investments.

He said there was more of a calm in markets than over the last few weeks as people embrace the coming U.S. fiscal stimulus, improving vaccine and virus news in the U.S. and a surging bond market with 10-year U.S. treasury surpassing 1.31 per cent.

"They've almost hit a one-year high and I think that's a sign that things are getting better," he said in an interview.

"And then we're starting to get more people that are confident in the recovery and confident in the markets starting to keep going."

Investors are positive that the impeachment trial of former U.S. president Donald Trump is over so Congress can return to dealing with a stimulus package that is now expected to be larger than originally forecast.

The S&P/TSX composite index closed up 32.29 points to a record close of 18,492.50 after hitting an intraday high of 18,579.68.

U.S. stock markets reached intraday highs and ended the day with the Dow Jones industrial average up 64.35 points at 31,522.75. The S&P 500 index closed down 2.24 points at 3,932.59, while the Nasdaq composite lost 47.97 points to 14,047.50.

The energy sector gained nearly three per cent on the day as both crude oil and natural gas prices moved higher.

The March crude oil contract was up 58 cents at US$60.05 per barrel after reaching a high of US$60.95. The March natural gas contract was up 21.7 cents at US$3.13 per mmBTU.

Shares of Vermilion Energy Inc. climbed 7.7 per cent while MEG Energy Corp. was up 5.2 per cent and Suncor Energy Inc. was 4.2 per cent higher.

Crude prices continued to increase on an improved economy and a pickup in global growth. Cold weather that affected much of North America also increased demand for heating oil, even in the U.S. south, while supply was affected by some refinery closings.

"It really is the sector that most people had forgotten about and then put into the penalty box," Taylor said.

"Energy is the best performing sector year-to-date and that feels like it's a trade that is going to keep going as the commodity rebounds."

Growing global confidence about a recovery from the pandemic has pushed most commodities up more than 10 per cent in 2021.

The Canadian dollar traded for 78.84 cents US compared with 78.67 cents US on Friday.

The health-care sector led the TSX, rising 7.4 per cent, with cannabis producers Aphria Inc. up 27.6 per cent, Aurora Cannabis Inc. 12.9 per cent and Cronos Group Inc. 7.6 per cent.

Shares of Hexo Corp. surged 22.2 per cent after it announced a $235-million deal to acquire competitor Zenabis Global Inc. that will give it a European foothold and strengthen its domestic business. Zenabis shares rose about 16 per cent.

They heavyweight financials sector was helped by a steepening bond curve, but still lagged behind U.S. banks.

Consumer staples, materials and industrials were lower.

Materials dropped 0.9 per cent as gold prices fell, while copper was up. Agnico Eagle Mines Ltd. lost 4.4 per cent, Iamgold Corp. was off 4.3 per cent and Kinross Gold Corp. was down 4.1 per cent.

The April gold contract was down US$24.20 at US$1,799.00 an ounce and the March copper contract was up 4.6 cents at US$3.83 a pound.

Bitcoin surpassed US$50,000 for the first time before closing at nearly US$48,527.

This report by The Canadian Press was first published Feb. 16, 2021.

Companies in this story: (TSX:AEM, TSX:IMG, TSX:K, TSX:APHA, TSX:ACB, TSX:CRON, TSX:HEXO, TSX:ZENA, TSX:VET, TSX:MEG, TSX:SU, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press