Investors kicked off holiday-shortened trading weeks in both the U.S. and Canada in buying moods Tuesday, sending indexes in New York and Toronto sharply higher.
The S&P/TSX composite index climbed 173.74 points or more than 1% cent to 12,554.98 at the close, adding to a nearly 300-point gain on Friday.
“It’s a fairly healthy day,” said Colum McKinley, a portfolio manager and vice-president of Canadian equities at CIBC Asset Management.
The Toronto stock market was lifted by gains across most sectors, particularly an almost 9% bump in metals and mining stocks, but dragged down by gold issues.
McKinley said recent big ups and downs in the market have become the new norm.
“We’re definitely going to have volatility in the short term, and we’re seeing that across all markets,” he said
In New York, enthusiasm was even stronger as the Dow Jones industrial average shot up 222.57 points to 16,196.41, while the broader S&P 500 composite rose 30.80 points to 1,895.58 and the tech-heavy Nasdaq composite jumped 98.45 points to 4,435.96.
The TSX was closed Monday for Ontario’s Family Day and American markets were shut down for Presidents’ Day.
The commodity-sensitive Canadian dollar slipped as oil and precious metals prices weakened, easing 0.10 of a U.S. cent to 72.04 cents US.
“The biggest driver in the near term for the Canadian dollar is going to be price of oil, and stability in the price of oil is eventually going to lead to stronger currency,” said McKinley.
The March contract for benchmark North American crude oil fell 40 cents to US$29.04 a barrel after a big run-up on Friday.
The retreat came despite word of an agreement between Russia and Saudi Arabia to freeze their oil output, but only if other OPEC countries agree to do the same. Analysts believe Iran is unlikely to go along because it wants to ramp up production now that economic sanctions have been removed.
McKinley said markets may start seeing early signs of a bounce back in crude prices as the number of active oil rigs decrease and the current market oversupply lessens.
“It’s going to be uneconomical for companies to drill,” he added.
Last Friday, oilfield services company Baker Hughes Inc. reported that the number of rigs exploring for oil and natural gas in the U.S. declined by 30 to 541, down from 1,358 rigs a year ago.
Meanwhile, March natural gas shed six cents to US$1.90 per mmBtu, while April gold plunged $31.20 to US$1,208.20 a troy ounce and March copper added two cents to US$2.05 a pound.