TSX closes higher

Oil price rise helps boost energy sec­tor

The Guardian (Charlottetown) - - BUSINESS -

The Toronto Stock Ex­change rose for a sec­ond day, pushed higher by strength in the energy sec­tor and a ris­ing price for oil.

The S&P/TSX com­pos­ite in­dex rose 224.44 points to close at 14,301.80.

In the U.S., the Dow Jones in­dus­trial av­er­age climbed 121.12 points to close at 17,751.39, while the Nas­daq gained 22.52 points to 5,111.73 and the S&P 500 gained 15.32 points at 2,108.57.

Craig Fehr, Cana­dian mar­ket strate­gist at Ed­ward Jones in St. Louis, said global stock mar­kets are back to nor­mal af­ter a pe­riod of in­sta­bil­ity fed by volatil­ity in the Chi­nese stock mar­ket.

The Chi­nese gov­ern­ment has stepped in with mea­sures aimed at prop­ping up its eq­uity mar­kets as the Shang­hai com­pos­ite in­dex has slid, most re­cently los­ing more than eight per cent of its value in Mon­day trad­ing.

China's se­cu­ri­ties reg­u­la­tor said it would do even more to sup­port the mar­ket af­ter Mon­day's fall, and Fehr said the volatil­ity doesn't nec­es­sar­ily in­di­cate that China's econ­omy is fal­ter­ing.

“That to me does pose a very big risk to mar­kets over the broader term, but I think that these big, sharp re­ac­tions in the stock mar­ket in China are re­ally more of a short-term move,” he said.

The Septem­ber con­tract for crude oil gained 81 cents to US$48.79, while the Septem­ber nat­u­ral gas con­tract gained 4.8 cents to US$2.864.

The energy sub­sec­tor of the TSX rose 3.52 per cent on the day, the big­gest gain among the in­dex's 10 sub­sec­tors. Nine of the 10 sub­sec­tors showed growth, with the ex­cep­tion be­ing health care. Fehr said the energy sec­tor was show­ing signs of life as the oil price be­gins to sta­bi­lize af­ter drop­ping by more than half since July 2014.

Energy stocks have been weighed down by “ex­treme pes­simism” about the fall in the price of oil, he said, but the mar­ket is mov­ing to­wards an equi­lib­rium around the $50 price point.

Even a small rise in the price of oil, he said, can at­tract in­vestors spooked by the slide.

“Ex­pec­ta­tions have just been beaten down so dra­mat­i­cally in that sec­tor,” he said.

The Au­gust gold con­tract closed down US$3.60 to US$1,092.60, while cop­per rose 0.5 of a cent to US$2.4075.

The loonie lost 0.10 of a cent to end the day at 77.26 cents US, fall­ing back af­ter ris­ing in mid­day in ad­vance of an an­nounce­ment from the U.S. Fed­eral Re­serve fol­low­ing its two-day pol­icy meet­ing.

The Amer­i­can cen­tral bank said it would hold rates steady and wait for fur­ther signs of eco­nomic re­cov­ery be­fore tak­ing fur­ther ac­tion. Many ex­pect the Fed to raise in­ter­est rates later this year. Fehr said the spread be­tween the in­ter­est rate poli­cies of the Cana­dian and Amer­i­can cen­tral banks could con­trib­ute to a fur­ther fall of the Cana­dian dol­lar against the green­back.

AP PHOTO

Traders Peter Man­cuso, left, and Kevin Walsh work on the floor of the New York Stock Ex­change, Wed­nes­day. U.S. stocks opened slightly higher as Goodyear and other com­pa­nies re­ported strong re­sults.

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