Tech stocks lead S&P/TSX composite to three-week high despite drop in oil prices

Tech stocks lead S&P/TSX composite to three-week high despite drop in oil prices

TORONTO — A broad rally led by tech pushed Canada’s main stock index to a three-week high, although it underperformed U.S. markets as the price of oil dropped 12 per cent and gold lost some of its lustre.

“It seems whatever happened in the last four days, the exact opposite is happening today,” said Michael Currie, vice-president and investment adviser at TD Wealth.

He pointed to a little optimism in Russia’s war with Ukraine.

“Traders are starting to think that perhaps a compromise could happen,” Currie said in an interview, pointing to a Russian government spokeswoman saying the Kremlin prefers negotiations over war.

The S&P/TSX composite index gained 261.20 points or 1.2 per cent to 21,493.23, its highest close since Feb. 15.

After sustaining steep losses in five of the last six days, U.S. stock markets recovered strongly. The Dow Jones industrial average was up 653.61 points at 33,286.25. The S&P 500 index was up 107.18 points or 2.6 per cent at 4,277.88, while the Nasdaq composite was 460.00 points or 3.6 per cent at 13,255.55.

“It’s just a complete reversal from the last few days,” Currie said, noting that the European stock market was also up almost seven per cent.

Wild intraday swings over the last few weeks gave way to market steadiness Wednesday with the trading trajectory not changing after starting strongly out of the gate Wednesday.

“There are up days and then there’s incredible up days and this is an incredible up day.”

Technology led the charge on the TSX, gaining 6.2 per cent with Shopify Inc. climbing 13.6 per cent. Hut 8 Mining Corp. rose 10.4 per cent and Lightspeed Commerce Inc. was 7.9 per cent higher.

Seven of the eight sectors on the TSX that ended the day higher were up by at least one per cent. Consumer discretionary increased 3.5 per cent with Aritzia Inc. up 7.9 per cent.

The heavyweight financials sector increased 2.1 per cent as bond yields rose. That helped Canada’s big banks to gain between 1.8 and 2.9 per cent.

The Canadian financial sector moved in sympathy with the U.S. sector after being constrained of late by weakness in New York.

“Some of the declines we’ve seen in the Canadian banks are not so much their fundamentals, but it’s just hard to have the Big 5 banks in the States falling and the big Canadian banks going up,” Currie said.

Industrials gained 1.7 per cent as shares of CAE Inc. increased 10 per cent and Air Canada moved up 5.0 per cent on lower crude oil prices that also helped the U.S. travel industry.

Energy was the biggest laggard on the day, losing 3.5 per cent as crude oil prices reversed weeks of increases that drove about a 62 per cent gain since Russia’s unprovoked attack on Ukraine.

The April crude oil contract was down US$15.00 at US$108.78 per barrel and the April natural gas contract was essentially flat at US$4.53 per mmBTU.

Vermilion Energy Inc. lost 8.4 per cent while Meg Energy Corp. was down 6.1 per cent.

The American Petroleum Institute reported that U.S. crude inventories rose by 2.8 million barrels last week.

The slide in oil prices was also accelerated by reports that the United Arab Emirates will urge fellow OPEC members to boost production and ease supply concerns.

A weakened U.S. dollar helped the Canadian dollar to rise from the low of 2022 to trade for 78 cents US compared with 77.72 cents US on Tuesday.

Materials fell as metals prices decreased.

The April gold contract was down US$55.10 at US$1,988.20 an ounce and the May copper contract was down 13.8 cents at US$4.57 a pound.

This report by The Canadian Press was first published March 9, 2022.

Companies in this story: (TSX:VET, TSX:MEG, TSX:ATZ, TSX:CAE, TSX:AC, TSX:SHOP, TSX:HUT, TSX:LSPD, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press