Currency traders watch computer monitors near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Thursday, Dec. 9, 2021. THE CANADIAN PRESS/AP-Lee Jin-man

S&P/TSX composite back on the upswing after rocky start to the week

S&P/TSX composite back on the upswing after rocky start to the week

Canada’s main stock index recovered its previous day losses and then some on Tuesday as energy and technology stocks rebounded strongly from what had been a rocky start to the trading week.

The S&P/TSX composite index was up 386.65 points at 20,924.87, one day after tightening restrictions around the globe in response to surging case counts of the new Omicron variant triggered a North American-wide market slump.

Craig Jerusalim, portfolio manager at CIBC Asset Management, said the reason the market recovered so handily Tuesday likely had something to do with the day’s positive news from pharmaceutical company Moderna about the effectiveness of its COVID-19 booster, as well as data from the U.K. and South Africa suggesting Omicron could peak quickly without the mortality and hospitalization rates of previous waves.

“The market is taking that as a big positive,” Jerusalim said, saying markets likely also benefited Tuesday from the end of tax loss-selling season, which can lead to bargain-hunting for oversold stocks.

The energy sector saw big gains Tuesday, driven by gains in the price of crude oil which took a hit in the previous day’s session due to Omicron fears. Big winners in that sector included Vermilion Energy Inc., which was up 7.5 per cent, and Enerplus Corp., which was up 6.3 per cent.

The February crude contract was up $2.51 at US$71.12 per barrel and the March natural gas contract was unchanged at US$3.64 per mmBTU.

The February gold contract was down US$5.90 at US$1,788.70 an ounce and the March copper contract was up five cents at US$4.35 a pound.

Travel-related stocks — such as Air Canada, which was up almost six per cent Tuesday — also got a healthy bump.

“But by far the biggest contributor to the TSX today is the big bounceback we’re seeing in Shopify,” Jerusalim said, adding there didn’t seem to be one single driver behind Shopify Inc.’s 6.5 per cent gain Tuesday, other than positive online retail data out of the U.S. and general overall market optimism.

“Shopify is by far Canada’s largest stock, and when it’s up mid-single digits in one day, that’s going to be by far the biggest contributor on the market today.”

In New York, the Dow Jones industrial average was up 560.54 points or 1.6 per cent at 35,492.70. The S&P 500 index gained 81.21 points at 4,649.23 while the Nasdaq composite was up 360.14 points at 15,341.09.

The Canadian dollar traded for 77.36 cents US compared with 77.27 cents US on Monday.

While December has been defined by a lot of market volatility, Jerusalim pointed out that the TSX60 is up about 25 per cent year-over-year.

“That’s beating the S&P500, the Dow Jones and the Nasdaq for the year,” he said. “Canada has had one of its strongest years relative to the U.S. in a very, very long time.”

Looking ahead to 2022, Jerusalim said he expects that pattern to continue, given starting valuations and other factors like this country’s comparatively stronger Covid-19 response.

“I’m thinking that Canadian markets can have another good year, both on an absolute basis and also on a relative basis to U.S. equities,” he said.

This report by The Canadian Press was first published Dec. 21, 2021.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Amanda Stephenson, The Canadian Press