TSX hits record high as New York markets mixed; Canadian dollar up

Chinese investors monitor stock prices at a brokerage house in Beijing, Friday, June 22, 2018. (AP Photo/Mark Schiefelbein)

A leap in oil prices helped Canada's main stock index close at a record high Friday and also countered some of the negative pressure on the loonie from disappointing inflation and retail sales data.

The August crude contract closed up $3.04 or 4.64 per cent at US$68.58 after OPEC agreed to an increase in production that was both lower than expected and somewhat light on specifics, said Macan Nia, senior investment strategist at Manulife Investments.

"There was really a lack of clarity in the numbers, and I think that's helped push oil higher."

The oil cartel ostensibly agreed to a roughly million barrel a day increase, but with few member countries in a position to ramp up production the actual increase could be more in the 600,000 to 800,000 barrel a day range, said Nia.

"Because of that we've seen a significant rally in the price of oil, because they were just expecting more of an increase."

The rising oil price pushed the S&P/TSX capped energy index up 3.21 per cent on the day to clearly lead the market.

Overall, the Toronto Stock Exchange's S&P/TSX composite index closed up 114.99 points at 16,450.14 to top the previous record of 16,420.95 set on Wednesday. The index also hit a record intra-day high of 16,489.46.

Rising energy prices also helped bolster the loonie, which took a hit earlier in the day on worse-than-expected economic data but averaged 75.14 cents US to be up 0.01 of a US cent for the day.

"Whereas interest rate differentials would have been dovish for the Canadian dollar, the news out of OPEC was very bullish for the Canadian dollar," said Nia.

Statistics Canada said Canada's annual inflation rate rose 2.2 per cent in May, well below the 2.6 per cent consensus among economists. April retail trade data also disappointed with a 1.2 per cent contraction that surprised economists.

"What that essentially did was reduce the odds of the market expecting the Bank of Canada to hike rates in July," said Nia.

Expectations of a rate hike next month fell from close to 70 per cent to around 55 per cent, he said, increasing the potential differential between rates in Canada and the U.S.

In New York, the Dow Jones industrial average closed up 119.19 points at 24,580.89. The S&P 500 index ended up 5.12 points at 2,754.88 and the Nasdaq composite index was down 20.13 points at 7,692.82.

U.S markets were also aided by the rise in energy stocks, while stocks in general were benefitting from an improvement in the risk sentiment after encouraging economic data out of Europe and talk of diffusing tension between the U.S. and China, said Nia.

The August gold contract closed up 20 cents at US$1,270.70 an ounce and the July copper contract was up a penny at US$3.03 a pound. The August natural gas contract ended down three cents at US$2.95 per mmBTU.

Cannabis stocks fell sharply after several days of gains following the passing of the marijuana legalization bill and announcement of an October 17 date to legally buy and smoke the product. Canopy Growth Corp. ended down 9.07 per cent, Aurora Cannabis down 4.58 per cent, and Aphria Inc. down 3.05 per cent.