Canada’s main stock index enjoyed its biggest gain in almost two months Tuesday, propped up by burgeoning oil prices and signs that China is moving to kick-start its slowing economy.
In Toronto, the S&P/TSX composite index rallied 211.35 points, or 1.56%, to end the day at 13,775.19, led by gains in energy and mining companies. The last time the TSX recorded a higher one-day gain was on Feb. 17 when it added 312.18 points.
Nearly all sectors were in the black, with materials, gold and metals and mining leading the way. Health-care stocks were the lone decliner, pressured by losses in shares in Valeant Pharmaceuticals (TSX:VRX), which fell by 63 cents or 1.72% to $35.93. The company’s stock price has plunged since August from its historic high of nearly $350 per share amid a number of investigations into its business practices.
Positive sentiment in North American markets was also supported by news that the government in Beijing has approved initiatives aimed at encouraging exports, including an increase in bank loans, greater tax rebates and extra support for export credits. Growth in the Chinese economy, the world’s second largest, has slowed in recent months.
The news from China helped support oil prices, with the June contract for benchmark North American crude rising $1.22 to US$44.66 a barrel.
There has also been concern over the curtailment of more than one million barrels a day of oilsands production as a result of the rampaging wildfire in the Fort McMurray, Alta., area.
Four of the five oilsands mining operations in the region have been shut down due to the fire, although Shell Canada said Tuesday it was resuming some production.
But despite that dent in oilsands crude, John Stephenson, president and chief executive of Stephenson & Co. Capital Management, said there remains a global supply glut that is still putting downward pressure on prices.
“Nothing has changed, we still have excessive inventories,” Stephenson said.
He said oil prices, and the loonie, which often trades in tandem, will remain unsteady until the other Canadian firms announce their restarts. Meanwhile, the commodity-sensitive Canadian dollar rebounded Tuesday from recent losses, up 0.28 of a U.S. cent to 77.42 cents US.
Elsewhere in commodities, the June contract for natural gas was up six cents at US$2.16 per mmBtu, while June gold fell $1.80 to US$1,264.80 a troy ounce and July copper eased off a penny to US$2.09 a pound.
New York markets were also sharply higher, with the Dow Jones industrial average surging 222.44 points or 1.26% to 17,928.35.
The broader S&P 500 rose 25.70 points to 2,084.39 and the Nasdaq added 59.67 points to 4,809.88.