Toronto rebounds as oil prices rise, while shine comes off gold

TORONTO — Canada’s main stock index rebounded as higher crude oil prices powered the energy sector while a hawkish tone from the U.S. Federal Reserve took the shine off gold.

The S&P/TSX composite index closed up 32.54 points to 21072.20.

In New York, the Dow Jones industrial average was down 170.64 points at 36236.47.

The S&P 500 index was down

4.53 points at 4696.05, while the Nasdaq composite was down 19.30 points at 15080.87.

Energy was the strongest sector on the TSX, rising three per cent with Vermilion Energy Inc. surging 9.2 per cent as crude oil briefly surpassed $80 US per barrel for the first time in a little more than seven weeks.

While an underinvestment supply has kept output in check, demand is picking up as the global economy is normalizing despite COVID-10 lockdowns, said Anish Chopra, managing director with Portfolio Management Corp.

“You’re at that inflection point where people are realizing it’s going to take years to get some of that oil supply, energy supply, back on, but the demand is there so the price of oil is reacting to that,” he said.

Holiday gasoline price savings are also dissipating due to short-term pressures such as unrest in Kazakhstan and output disruptions in Libya.

The February crude contract was up $1.61 US at $79.46 US per barrel, and the February natural gas contract was down seven cents at $3.81 US per mmBTU.

The Canadian dollar traded for 78.49 cents US compared with

78.63 cents US on Wednesday.

Financials was helped by minutes from the Fed’s December meeting in which members supported an earlier withdrawal of stimulus and hike in interest rates.

Canadian bank shares appreciated as 10-year bond yields moved above

1.7 per cent on both sides of the border, with Canadian Western Bank up 4.6 per cent, Laurentian Bank

2.3 per cent higher and CIBC rising 2.1 per cent.

The tone from the U.S. central bank was not good for technology and materials sectors, both of which lost ground.

Materials decreased 2.7 per cent, in part due to Stelco Holdings Inc. shares falling 10.3 per cent after the Hamilton steelmaker said shipments will be lower than previously forecast in the fourth quarter.

Pressure on the sector also came from lower gold prices as central banks prepared to tackle inflation.

The February gold contract was down $35.90 US at $1,789.20 US an ounce, and the March copper contract was down 5.9 cents at $4.35 US a pound.

“Gold tends to be an inflation hedge among some of its other uses, so higher interest rates to offset inflation aren’t as good for gold,” Chopra said.

Tech dropped 1.2 per cent with Shopify Inc. suffering a third straight day of losses, down another 1.7 per cent on Thursday.

“For tech, they’ve certainly been the story of the last two years during COVID and their valuations reflect that. So to see their valuations come off from pretty high levels, it’s reasonable.”