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Saturday, October 23, 2021
Stocks & Shares

Commodities lead TSX bounce back

TSX

The S&P/TSX composite index finished 122.71 points higher at 19,310.74 after reaching an intraday high of 19,340.25

Commodities propelled Canada’s main stock index to bounce back and outpace U.S. stock markets even as the Dow Jones industrial average hit an all-time high.

The S&P/TSX composite index finished 122.71 points higher at 19,310.74 after reaching an intraday high of 19,340.25 that’s 100 points off the record.

In New York, the Dow Jones rose 97.31 points at 34,230.34 after setting a record of 34,331.20 in earlier trading. The S&P 500 index added 2.93 points at 4,167.59, while the Nasdaq composite dropped 51.07 points at 13,582.43.

The TSX performance was helped by gains from its biggest sectors led by energy, materials and industrials.

The energy sector jumped 2.7 per cent despite a dip in crude oil prices on a drawdown in U.S. inventories that exceeded expectations.

The prospects of elevated demand as the global economy reopens is the main driver for the sector, said Greg Taylor, chief investment officer of Purpose Investments.

It’s a sector that most investors had written off over the last few years and really underinvested, he said in an interview.

And as people are getting more comfortable that oil can hold over $60 and people are looking that the driving season’s coming back, that there’s lots of demand as the economy really reopens, that could be putting a situation where the energy sector and the companies in it put up some good numbers, he said.

Quarterly results for the oilpatch have been strong.

Taylor said investors will need to start allocating more money toward energy because that’s where a lot of the growth will be.

The June crude contract was down six cents at US$65.63 per barrel and the June natural gas contract was down 2.9 cents at nearly US$2.94 per mmBTU.

Shares of Canadian Natural Resources Ltd. 3.8 per cent with Suncor Energy Inc. gained 3.6 per cent.

Materials got a lift from higher prices for gold and continuing strong numbers for copper with Ero Copper Corp rising 13.6 per cent, HudBay Minerals Inc. 8.7 per cent higher and Teck Resources Ltd. gaining 7.1 per cent.

The June gold contract was up US$8.30 at US$1,784.30 an ounce and the July copper contract was up 0.25 of a cent at US$4.52 a pound.

The Canadian dollar traded for 81.49 cents US compared with 81.20 cents US on Tuesday.

Meanwhile, technology shed 1.2 per cent as Shopify Inc. and BlackBerry Ltd. each declined 2.1 per cent.

The sector movements reinforce that a rotation is going on towards cyclicals and commodities and away from technology, said Taylor. Net-net that could be really good for the TSX in Canada starting to make up some ground.

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