TSX closes lower despite boost in energy and mining

Energy and mining stocks got a boost from rising commodity prices Monday, but Canada’s main stock index closed down overall to kick off a short trading week.

The S&P/TSX composite index was down 41.80 points at 21942.28.

Trading volumes were light coming off of last week’s rally, which saw the S&P/TSX composite nudge to a new alltime closing high on Thursday before taking a breather on Friday.

The best performing sector on Bay Street on Monday was the oil and gas industry, with the S&P/TSX capped energy index up almost two per cent by day’s end.

The May crude contract was up $1.32 US at $81.95 US per barrel and the May natural gas contract was down two cents at $1.79 US per mmBTU.

Mining companies also saw gains, thanks to the price of gold, which continued its ascent Monday.

The April gold contract was up $16.40 US at $2,176.40 US an ounce and the May copper contract was up a penny at $4.02 US a pound.

“Oil is strong and getting stronger, and gold of course has been making big moves, even briefly hitting $2,000 US an ounce last week,” said Brian Madden, chief investment officer with First Avenue Investment Counsel Inc.

“Oil obviously is pricing in some of the geopolitical conflict we’ve been dealing with for a long time … and maybe an improving demand backdrop, with investors increasingly expecting or pricing in a soft landing or no-recession scenario in the U.S. at least,” he said.

In New York, the Dow Jones industrial average was down 162.26 points at 39313.64. The S&P 500 index was down 15.99 points at 5218.19, while the Nasdaq composite was down 44.35 points at 16384.47.

Last week saw a big run on Wall Street, with all three main U.S. stock indexes setting records on Thursday. Markets were buoyant in the wake of last Wednesday’s interest rate decision by the U.S. Federal Reserve, which indicated it still could cut rates three times this year.

The big question now is whether the strong performance of stocks so far this year can be sustained..

“Sufficient conditions to sustain the rally would be ongoing support from corporate profits, which by all accounts in the States are coming in stronger than expected,” Madden said.

“And the thing that could throw cold water on the rally would be if the Fed and the Bank of Canada do indeed stay ‘higher for longer,’ to borrow the popular phrase.”

Investors have been afraid the economy will take a dive if interest rates stay elevated for too long. Madden said right now, the market is pricing in an expectation that central banks will cut rates, or at least signal the start of the rate-cutting process, this summer.

“If they don’t, I don’t know if it will be enough to kick off a full-on bear market, much less a recession,” he said. “But it could stall the advance, or at least cause a pullback.”

In Canada, stocks making notable moves on Monday included tech company Lightspeed Commerce Inc., which saw its share price jump 3.42 per cent after CEO Dax Dasilva mused in an interview about the possible advantages of taking the company private.

Utilities company Northland Power Inc. saw its stock price fall 7.28 per cent on news that its chief executive Mike Crawley will step down from the top job later this year.

The Canadian dollar traded for 73.62 cents US compared with

73.57 cents US on Friday.

Markets on both side of the border will be closed Friday for the Easter long weekend.