TORONTO — The S&P/TSX composite index briefly cracked the 20,000-point level for the first time on a surge in the key energy sector after OPEC gave an optimistic outlook for global demand.
“I think that’s really the driving force behind what’s happening in the market today,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
The cartel and Russia agreed to add back barrels to the global market. It would increase production by 841,000 a day in July and hold that flat until April 2022.
The Saudi oil minister gave a bullish outlook saying global reopenings are really taking hold as COVID continues to fade in many parts of the world and vaccinations continue to rise.
The result was European benchmark Brent crude prices closing at their highest level since January 2020 and West Texas Intermediate reaching its highest price since the fourth quarter of 2018.
The July crude oil contract was up US$1.40 at US$67.72 per barrel after reaching a high of US$68.87. The July natural gas contract was up 11.8 cents at US$3.10 per mmBTU.
The energy sector gained 4.4 per cent with shares of Crescent Point Energy Corp. up 6.5 per cent and Cenovus Energy Inc. 6.2 per cent higher.
Archibald said the sector spawned risk-on action in the market as 10 of the 11 major sectors were higher.
He foresees the energy sector to keep rising as oil companies won’t be able to bring back production quickly as demand recovers at some point to pre-pandemic levels.
“It seems to me energy is probably going to continue to work here and it’s really a big driver of the TSX performance today.”
Canada’s main stock index closed up 245.02 points to 19,976.01 after trading as high as 20,022.13 before the close.
In New York, the Dow Jones industrial average was up 45.86 points at 34,575.31. The S&P 500 index was down 2.07 points at 4,202.04, while the Nasdaq composite was down 12.26 points at 13,736.48.
The Canadian dollar traded for 83.06 cents US compared with 82.84 cents on Monday.
Archibald said the loonie may have reached its short-term peak given that lockdowns are expected to moderate economic growth in the second quarter.
Canada’s GDP increased 5.6 per cent in the first quarter but that was below the 6.8 per cent expected by economists while the previous quarter was revised slightly lower.
Materials was up 1.6 per cent despite a dip in metals prices.
The August gold contract was down 30 cents at US$1,905.00 an ounce and the July copper contract was down 2.4 cents at US$4.65 a pound.
Technology increased as shares of BlackBerry Ltd. surged 12.3 per cent and Shopify Inc. was up 2.1 per cent.
The heavyweight financials sector was higher, led by banks as CIBC rose 2.2 per cent, Bank of Montreal was up 1.4 per cent and the Royal Bank of Canada was 1.3 per cent higher.
This report by The Canadian Press was first published June 1, 2021.
Companies in this story: (TSX:CM, TSX:BMO, TSX:RY, TSX:BB, TSX:SHOP, TSX:CPG, TSX:CVE, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press