Energy and materials boost Toronto market, U.S. stocks surge higher

By Ian Bickis, The Canadian Press

Canada’s main stock index saw mild gains Monday while U.S. markets surged higher as worries of a trade war with China eased.

The rebound came after Chinese officials signalled some flexibility on policies including foreign investment in China and South Korea reached a new deal on steel with the U.S., said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis.

“If we look at the equity markets at large, I would say this is the collective deep breath of investors today, after the big sell-off last week predicated on the rising fears that a trade war could be breaking out.”

The S&P/TSX composite index closed up 74.82 points at 15,298.56, boosted by metals and energy stocks.

In New York, the Dow Jones industrial average closed up 669.40 points to 24,202.60 for its largest one-day gain since August 2015, regaining almost half what it had given up last week. The S&P 500 index ended up 70.29 points to 2,658.55 and the Nasdaq composite index was up 227.87 points to 7,220.54.

U.S. President Donald Trump sparked trade fears last week after imposing tariffs on some US$60 billion worth of Chinese imports as well as investment restrictions, adding to trade tension on the steel and aluminum tariffs he moved to impose earlier in the month.

China has promised to defend its interests, raising fears of rising protectionism on both sides, but recent signs of concessions on both sides is easing concerns, said Fehr.

“Given the signs we’re getting that there’s perhaps some concession to be made related to some of the tariffs that have been announced, I think the markets are finding some solace in that and we’re getting a bit of a relief rally after last week’s declines.”

Canada didn’t see the same gains Monday as U.S. stocks because it hadn’t been hit as hard, he said.

“The domestic market didn’t see the declines last week like we saw in the S&P 500 and the Dow. The TSX is also being held back a little bit today by the weakness in oil prices.”

The Canadian dollar closed at 77.60, down 0.18 of a US cent, also held back by oil prices, said Fehr, but still up from recent lows after higher-than-expected inflation data last week.

The May crude contract closed down 33 cents to US$65.55 per barrel and the May natural gas contract was up two cents to US$2.66 per mmBTU.

The April gold contract closed up US$5.10 to US$1,355.00 an ounce and the May copper contract was down two cents to US$2.97 a pound.

The rise in gold prices made it one of the biggest sector gains on the TSX. Kinross Gold Corp. climbed 4.03 per cent after the metal’s price gains, as well as after settling with the U.S. Securities and Exchange Commission over civil charges that it failed to ensure its payments in Africa were not being used to bribe government officials.

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