A sign board in Toronto displays the TSX close on Monday March 16, 2020. THE CANADIAN PRESS/Frank Gunn

Copper prices hit 10-year high as rising commodity prices, aside from gold, lift TSX

Copper prices hit 10-year high as rising commodity prices, aside from gold, lift TSX

TORONTO — Copper rose to a 10-year high Tuesday as a gain in most commodity prices helped to lift Canada’s main stock index slightly on a flat day for North American markets.

The May copper contract was up 4.7 cents at nearly US$4.49 a pound, the most since 2011 and up about 91 per cent from a year ago.

The increase was propelled by a strike in Chile and prospects of a rebounding global economy.

“Copper and iron ore have extended rallies to fresh cycle highs” on those expectations, a report from Scotiabank noted.

Copper has benefited from near-term reflation and longer term decarbonization, said Giles Marshall, portfolio manager at Fiduciary Trust Canada.

The June gold contract was down US$1.30 at US$1,778.80 an ounce.

But oil and lumber prices have been strong, which is beneficial for Canada’s stock market.

The June crude contract rose US$1.03 at US$62.94 per barrel and the June natural gas contract was up 6.8 cents at US$2.94 per mmBTU. Shares of Vermilion Energy Inc. climbed 1.8 per cent while Suncor Energy Inc. was up 1.5 per cent.

Crude has remained above US$60 for almost two weeks. It is up nearly 30 per cent so far in 2021 and is 392 per cent higher than where it was a year ago.

West Texas Intermediate got a lift as OPEC plus Russia said it was sticking to its plan to very gradually boost oil output beginning May 1.

As a result, the Canadian dollar traded for 80.63 cents US compared with 80.57 cents US on Monday.

Forest products producers Interfor Corp. and Canfor Corp. were the best performers in the materials sector, gaining three and 2.7 per cent, respectively. But that wasn’t enough to prevent the sector from being the biggest laggard on the day as Oceanagold Corp. lost 6.1 per cent and Fortuna Silver Mines Inc. slipped 4.3 per cent.

Increased commodity prices isn’t being accompanied by a move higher in the bond market, Marshall said in an interview.

The Canadian government 10-year bond yield is steady at 1.51 per cent.

Marshall said bond yields remain flat even though company executives are talking more about inflation in first-quarter results calls than they were a year ago amid rising input prices.

There are significant inflationary pressures from rising commodity prices, he noted.

“Maybe it’s just that they (bond markets) think the Fed is going to continue to be supportive with quantitative easing.”

The Federal Reserve will give its assessment of the state of the economy on Wednesday but the central bank isn’t expected to suggest any near-term shift from its support of monetary stimulus. That’s different than the Bank of Canada, which recently said it would begin tapering bond purchases.

Markets were flat ahead of the comments from the Fed as investors were waiting to see the bank’s approach.

The S&P/TSX composite index closed up 4.53 points to 19,175.09 after hitting an intraday high of 19,241.20 that was 140 points off the record high.

In New York, the Dow Jones industrial average was up 3.36 points at 33,984.93. The S&P 500 index was down 0.9 of a point at 4,186.72, while the Nasdaq composite was down 48.56 points at 14,090.22 after setting an all-time intraday high of 14,171.24.

Stock markets have benefited from an extraordinary move since early November when Joe Biden appeared headed to being elected president and first confirmation of a COVID-19 vaccine by Pfizer, said Marshall.

“We’ve had an incredible move since then. The last time we had a five per cent pullback was in mid-November, so it’s over six months since we’ve had a five per cent pullback.”

This report by The Canadian Press was first published April 27, 2021.


Ross Marowits, The Canadian Press

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