TORONTO – Canada’s main stock market dipped again Wednesday despite crude oil surpassing US$60 a barrel and the Federal Reserve’s more dovish tone.
After a rough start to trading on lingering trade concerns, the market got an afternoon boost once the U.S. central bank said it expects to only raise rates once through 2021.
But the S&P/TSX composite index dipped again before closing to lose 20.54 points on the day to 16,167.56, after hitting an intraday high of 16,214.66
Most sectors fell on the day, including health care, industrials and financials.
The key energy sector gained almost two per cent after oil prices rose above $60 for the first time in more than four months on lower-than-expected U.S. oil inventories.
That helped oil producers like Canadian Natural Resources, Imperial Oil and Suncor Energy.
The May crude contract was up 94 cents at US$60.23 per barrel and the April natural gas contract was down 5.4 cents at US$2.82 per mmBTU.
Materials gained 0.74 per cent led by Barrick Gold even though the April gold contract was down US$4.80 at US$1,301.70 an ounce and the May copper contract was down 0.2 of a cent at US$2.92 a pound.
“Basically resources are rallying today and that’s what’s driving the Canadian market and that is stemming from a combination of stronger oil prices but also on the materials side as well,” said Candice Bangsund, portfolio manager for Fiera Capital.
She expects prices will rise to US$70 per barrel in 2019 but won’t return to triple digits because U.S. supply will temper increases.
The Canadian dollar traded at an average of 75.09 cents US compared with an average of 75.23 cents US on Tuesday.
In New York, the Dow Jones industrial average was down 141.71 points at 25,745.67. The S&P 500 index was down 8.34 points at 2,824.23, while the Nasdaq composite was up 5.02 points at 7,728.97.
Bangsund said markets got an jolt after the Federal Reserve surprised observers with a position she expects the Bank of Canada to follow.
“We didn’t really think that the Fed could get that much more dovish but they surprised and were able to basically validate that dovish stance,” she said in an interview.
Bangsund said U.S. markets are now increasing the likelihood of a rate hike this year to almost 50 per cent and she’s sure the Canadian market will follow suit.
Despite Wednesday’s slight dip, she remains bullish about the TSX, forecasting it will end the year at 17,300. That is seven per cent higher and would represent a 20.8 per cent increase for the year.News from © Canadian Press Enterprises Inc. 2019