North American stock markets surged Tuesday as investors cheered on news that U.S. President Donald Trump has revived plans to build the Keystone XL pipeline, which would transport oil from Canada to the U.S.
In Toronto, the S&P/TSX composite index rallied 130.56 points to 15,610.69, pushed higher by sharp gains in energy and metal stocks.
Trump signed an executive order inviting Calgary pipeline-maker TransCanada Corp. to resubmit an application for a permit to construct the proposed 1,900-kilometre pipeline that will carry crude from Alberta to Nebraska.
Trump said he wants the deal to be renegotiated and for the pipeline to be made of steel made from the U.S. Much of the stockpiled pipe has already been purchased from overseas.
TransCanada says it plans on reapplying to build Keystone now that Trump has given them the green light. Its shares jumped 2.72%, or $1.70, to close at $64.24 on the TSX.
The massive infrastructure project, which will connect existing lines running to U.S. refineries to the Gulf Coast, faced opposition from both environmental and Aboriginal groups, and was killed by former U.S. president Barack Obama in 2015.
Although the news sent the energy sector higher, portfolio manager Craig Jerusalim noted there are still many obstacles to cross before the project gets the final go-ahead.
“It’s not smooth sailing from an executive order to pipes going into the ground,” said Jerusalim, who works at CIBC Asset Management.
“There is still a lot to be worked out and the terms still need to be renegotiated.”
Trump also met with the heads of the big automakers, General Motors, Ford Motor and Fiat Chrysler Automobiles, to tell them he wants them build new factories in the U.S. He’s warned of a “substantial border tax” on companies that move manufacturing out of the country and promised tax advantages to those that produce domestically.
Jerusalim says investors have been buoyed by promises made by Trump during his campaign, and now they are awaiting to see if he actually follows through on them.
“A lot of what Trump is trying to do is jobs related, whether he’s talking about these free-trade deals or trying to bring jobs back onshore that moved offshore. That’s really at the grassroots level going to be what allows U.S. growth to move forward,” he said.
“We all know we’re in the late innings of this economic cycle. It’s been eight years since the last recession so how much longer it (growth) can go on will be dependent on jobs.”
In New York, the Dow Jones industrial average surged 112.86 points to 19,912.71. The S&P 500 rose 14.87 points to 2,280.07 and the Nasdaq composite was up 48.02 points at 5,600.96 — both hitting record highs.
Bolstered crude prices and a lower greenback helped lift the Canadian dollar up 0.61 of a U.S. cent to US75.98¢.
The February crude contract gained US43¢ at US$53.18 per barrel while March natural gas contracts gained US4¢ at US$3.30 per mmBTU.
The February gold contract fell $4.80 to US$1,210.80 an ounce and March copper contracts added US6¢ at US$2.71 a pound.
With files from The Associated Press