TSX up on gold and oil

“You’ve got oil prices that have moved higher and that’s always positive for the TSX and you’ve also got commodity prices moving higher,” said Scott Vali, vice president of equities and a portfolio manager at CIBC Global Asset Management.

The May crude contract was up US79¢ at US$51.03 per barrel, which Vali in part attributed to more constructive oil inventory levels data coming out of the U.S. in the last week.

“The market had kind of been questioning the strategy with OPEC over the last couple of weeks and I think that’s kind of been pushed back,” he said.

OPEC members, including Saudi Arabia, agreed in late November to cut their production by 1.2 million barrels a day, the first reduction agreed to by the 14-member cartel since 2008. Eleven other non-OPEC oil-producing countries promised in December to cut an additional 558,000 barrels a day, reaching an overall reduction of 1.8 million barrels per day.

In other commodities, the June gold contract advanced US$4.40 at US$1,258.40 an ounce, May natural gas contracts added US17¢ at US$3.29 per mmBTU, and May copper contracts were unchanged at US$2.61 a pound.

The Canadian dollar was at US74.59¢ US, down 0.11 of a cent.

South of the border, major New York indices were barely positive. The Dow Jones industrial average gained 39.03 points at 20,689.24, while the S&P 500 inched ahead 1.32 points to 2,360.16 and the Nasdaq composite index edged up 3.93 points to 5,898.61.

“Broadly, the market is digesting mixed economic news,” said Vali, referencing disappointing data out of the automotive sector Monday in which Ford, Fiat Chrysler, Honda and Toyota all reported sales declines in the U.S. last month as consumers’ appetites for passenger cars waned.

“That’s got some concerned in the market with respect to the ability of the auto sales to continue at the pace they had been, and what that means for the broader economy, particularly if this is the first sign that the consumer is slowing down to some extent.”

Investors are also grappling with President Donald Trump’s ability to follow through with his repeated promises to reform taxes, slash red tape and ramp up defence and infrastructure spending — which initially buoyed the markets since the U.S. election in November — after his recent failed bid to replace Obamacare.

“Given the issues he had with the health-care bill there’s questions again around what the success rate’s going to look like from the standpoint of tax reform and stimulus,” said Vali.

“This causes a bit of a pause about how people think what the outcomes in the U.S. are going to be.”