TSX CLOSES HIGHER ON OIL PRICE RALLY
TORONTO • The Toronto stock market closed sharply higher Tuesday as the rally in crude prices continued with crude closing above US$50 a barrel for the first time in a month as cutbacks by major producers raise hopes that prices have bottomed.
The S&P/TSX composite index jumped 162.41 points to a two-month high of 15,062.88.
The TSX energy sector gained 4% as oil in New York shot up US$3.48 to US$53.05 a barrel, adding up to a 19% surge in prices over the last four sessions. However, prices are still down about 50% from the most recent highs reached last June because of a huge oversupply on world markets.
Higher oil prices helped push the Canadian dollar up US1.16¢ to US80.67¢ after charging ahead more than eight-tenths of a cent on Monday.
New York markets were also sharply higher as automakers reported doubledigit sales increases in the United States in January. That helped balance other data showing orders to U.S. factories dropped for a fifth consecutive month in December, down 3.4%. Also, a key category that signals business investment plans fell for a fourth straight month.
The Dow Jones industrials soared 305.36 points to 17,666.4, the Nasdaq climbed 51.05 points to 4,727.74 and the S&P 500 index was up 29.18 points at 2,050.03.
Oil companies have responded to oversupply by slashing capital spending plans for drilling and other projects and in some cases cutting production, but analysts warn that it’s far too early to sound the all-clear on falling prices.
“There hasn’t been a ton of material change in the supply-demand imbalance and that is really the fundamental issue,” said Ben Jang, portfolio manager at Nicola Wealth Management in Vancouver.
“I think we will see a rebound in prices but after that, we will retest the lows.”
BP on Tuesday joined a growing list of companies cutting back, announcing that capital expenditure in 2015 will total around US$20-billion, significantly lower than its previous guidance of $24-billion to $26-billion.
It also reported a loss of US$4.4-billion for the fourth quarter of 2014.
A major energy sector gainer was Canadian Oil Sands, which jumped $1.94 or 20.5% to $11.39. Its stock has soared 60% since Thursday after TD Securities raised its price target. There were also reports COS could become a takeover target by one of its partners in Syncrude Canada Ltd., which is a joint venture between seven energy companies.
The base metals sector jumped 6.6% as March copper soared 9¢ to US$2.58 a pound.
Financials also lent key support, rising 2.55%.
The gold sector was the major decliner, down about 4% as April bullion lost $16.50 to US$1,259.70 an ounce.
WestJet Airlines Ltd. posted a record fourth-quarter profit of $90.7-million or 70¢ a share, in line with estimates. That was up 34% from $67.8-million a year ago. Revenue was $994.4-million, up 7.3% from a year ago and also in line with estimates. The carrier hiked its dividend by 17% as well, but WestJet shares drifted 80¢ lower to $31.10.