Oil price drives TSX rise but trade cautious
Toronto’s main stock index closed higher on Wednesday as firmer oil prices boosted energy shares, but the rise was limited by caution about the prospects for the North American economy.
The energy sector ended up 1.4 percent and was the key driver behind the TSX’s latest gain as it drew momentum from a surge in oil prices to a seven-month high.
That helped boost shares of EnCana Corp (ECA.TO) by 2.5 percent to C$62.28, and Canadian Natural Resources (CNQ.TO) by 1.4 percent to C$64.50.
The TSX, which dropped just 1 point on Tuesday, put in a cautious performance compared with the slew of triple-digit advances it recorded during its 41-percent climb from the five-year low it skidded to in March.
“This is absolutely a market that’s looking for direction and that’s typical of what happens after a strong runup like we’ve had,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
“Investors are basically just looking for reasons to push the market higher and at the same time there is a considerable body of skeptics, and that includes me, who say markets have gone very fast in a short span of time and we need some time to digest these gains here.”
The S&P/TSX composite index .GSPTSE closed 50.12 points, or 0.48 percent, higher at 10,597.98. Early in the session it rallied 126 points to 10,674.14, its highest level since Oct. 14.
Shares of gold-mining stocks were one of the main drags on the index during Wednesday’s session as the price of gold fell further from last week’s run toward $1,000 an ounce.
That knocked shares of Barrick Gold Corp (ABX.TO) down 2.3 percent to C$38.87, followed by Yamana Gold (YRI.TO), which ended the session down 3.6 percent at C$11.24.
The financials index finished almost flat as a report from the U.S. Federal Reserve that said economic conditions were weak or got worse through May [ID:nN10454542] triggered concerns about the North American economy.
That left weighty bank shares mostly out of the mix of companies that dictated direction on Wednesday as gains by some were offset by slides among others.
“(Financials have) had an exceptional run since their March lows and there is lingering uncertainty about the direction of the North American economy,” Picardo said.
“There’s been a great deal of optimism in recent weeks but some of that is being tempered down a little bit and that’s just normal sort of market movements.”