TSX BOUNCES BACK AFTER SHARP SELL- OFFS.
TORONTO • The Toronto stock market closed higher Tuesday with the resource sectors positive as buyers started to nibble at companies that have sustained a severe mauling because of a steep drop in oil prices and other economic concerns.
The S&P/TSX composite index gained 51.56 points to 14,195.73.
The Canadian dollar was up US0.32¢ to US87.41¢.
Worries that last week’s positive jobs creation data could result in the U.S. Federal Reserve moving sooner to raise interest rates punished most U.S. indexes.
The Dow Jones industrials fell 51.28 points to 17,801.2 and the S&P 500 index dipped 0.49 of a point to 2,059.82, while the Nasdaq gained 25.78 points to 4,766.47.
Oil prices rose 77¢ to US$63.82 a barrel after tumbling almost US$3 a barrel Monday in the wake of weak trade data from China and a report from Morgan Stanley that suggested prices for Brent crude, an international benchmark, could fall to as low as US$43 a barrel next year.
The TSX energy sector closed up 1.13% Tuesday — but the component, which makes up 23% of the TSX, is still under water almost 20% year to date as markets try to work out a huge imbalance in supply and demand. “The energy space is almost looking like capitulation,” observed Paul Vaillancourt, executive vice-president, private wealth, at Fiera Capital in Calgary. “When we see days like this, they’re expected. Never waste an opportunity and in this situation here . . . fear and panic have resulted in some pretty indiscriminate selling.”
Canadian energy companies continue to be impacted by plunging oil prices. Baytex Energy is reducing its monthly dividend by more than half to 10¢ a month. The company is also cutting 2015 spending plans by 30% from earlier estimates as well as its production ranges. Baytex shares gained 44¢ to $16.90.
Another bright spot on the TSX was Talisman Energy Inc., which said several parties, including Spanish energy company Repsol, have approached it about potential deals.
Talisman and Repsol held inconclusive talks during the summer but the Calgary company’s shares have plunged about 60% since then, making it a more attractive takeover target. Its shares rose 11.85% to $4.81.
Miners also provided some lift to the TSX, with the gold sector ahead 4.4% as bullion gained $36.80 to US$1,231.50 an ounce.
The base metals sector was up 2.25% as March copper rose four cents to US$2.93 a pound.
Financials led decliners, down 0.3%. Financials have been sliding since last week after the big banks delivered a mixed bag of earnings and warned of a challenging 2015.
Investors have been cutting their exposure to banks because of worries that falling oil will negatively impact economic growth and cut back on lending.
AGF Management Ltd. was the major drag on the sector Tuesday, down 14.65% to $8.28 after the company said it would cut its quarterly dividend by 70% to 8¢ a share as of the first quarter of 2015.