TSX, loonie close higher as oil prices climb
The Canadian dollar appears in this undated file photo. (Jonathan Hayward / THE CANADIAN PRESS)
Alexandra Posadzki, The Canadian Press
Published Friday, January 22, 2016 12:37AM EST
Last Updated Friday, January 22, 2016 6:01PM EST
TORONTO -- Strengthening oil prices boosted North American markets Friday as investors mulled the possibility of monetary stimulus in Europe and Asia.
The Toronto Stock Exchange's S&P/TSX composite index soared 353.72 points to 12,389.58, adding to a big 192-point gain on Thursday.
Energy stocks led the charge, climbing 5.64 per cent as the March contract for benchmark crude rose $2.66 or nine per cent to US$32.19 a barrel.
The commodity-sensitive loonie also benefited from the bounce in oil prices, rising 0.64 of a U.S. cent to 70.67 cents US.
The gains on the TSX were fairly widespread, with only two segments posting losses. Base metals stocks declined by 1.19 per cent, while metals and mining stocks slipped 0.36 per cent.
Steve Belisle, senior portfolio manager at Manulife Asset Management, said it's typical for companies beyond the energy sector to benefit from a boost in crude prices.
"As oil has been going down and down, some stocks were being sold for no reason and are now very cheap," Belisle said. "So it's normal that when oil recovers you see the whole market being lifted up like this."
In New York, the Dow Jones industrial average was up 210.83 points at 16,093.51, while the S&P 500 advanced 37.91 points to 1,906.90 and the Nasdaq rose 119.12 points to 4,591.18.
The boost on North American markets followed big rallies Friday in Europe and Asia amid expectations central banks are poised to inject more stimulus into flagging economies.
Japan's Nikkei 225 index, which earlier this week moved into bear market territory, rose 5.9 per cent on expectations the Bank of Japan will move to stimulate the economy.
Rallies on European markets also strengthened after the head of the European Central Bank, Mario Draghi, said the bank had many options to boost inflation and is determined and willing to act. On Thursday, Draghi suggested the bank will consider more stimulus action at its next meeting in March.
France's CAC 40 added 3.1 per cent, Britain's FTSE 100 climbed 2.2 per cent and Germany's DAX rose two per cent.
Elsewhere in commodities, February natural gas was unchanged at US$2.14 per mmBtu and March copper advanced a penny to US$2.00 a pound, while February gold slumped $1.90 to US$1,096.30 an ounce.
Although he is skeptical that the rally will persist in the immediate term, Belisle said his outlook for the U.S. stock market is positive for the year overall.
"We think in the medium term you'll see a re-acceleration in the U.S. economy and that will drive a recovery in the stock market," Belisle said.
Several pieces of data released Friday pointed to strength in the U.S. economy, including a preliminary reading of the January manufacturing purchasing managers' index, which came in above expectations. Meanwhile, sales of existing homes south of the border jumped 14.7 per cent in December.
"The way things were going, the market was almost pricing in a recession in the U.S., and we really don't think that's going to happen," Belisle said. "As the economic data confirms that there's no recession, I think the market at some point will turn."