TSX moves up as Mideast blast lifts commodities, markets catch up after holiday
Published Tuesday, August 4, 2020 3:29AM EDT Last Updated Tuesday, August 4, 2020 5:52PM EDT
A man walks past a bank's electronic board showing the Hong Kong share index in Hong Kong Wednesday, Aug. 8, 2018. (AP Photo/Vincent Yu)
TORONTO -- The main stock index in Toronto closed higher on Tuesday as commodities rose on fears of potential conflict in the Middle East and Canadian markets caught up with their American peers after Monday's Civic Holiday break.
A massive explosion rocked Beirut on Tuesday, flattening much of the port, damaging buildings across the capital and sending a giant mushroom cloud into the sky.
Lebanon's health minister said more than 60 people were killed and more than 3,000 injured in the huge explosion for which no immediate cause was known.
In Toronto, the S&P/TSX composite index closed on Tuesday up 198.83 points at 16,368.03.
"It's still unclear as to the cause of that explosion but it has really turned around a number of the commodities," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
He pointed out gold had been trading lower but recovered, with the December gold contract closing ahead by US$34.70 at a record US$2,021.00 an ounce.
Similarly, oil prices were down early on but the September West Texas Intermediate crude contract closed at US$41.70 per barrel, up 69 cents US.
In response to the higher gold price, B2Gold Corp. rose 3.12 per cent to $9.57, Kinross Gold Corp. was up 3.04 per cent to $12.88 and Barrick Gold Corp. jumped 2.58 per cent to $39.71.
Meanwhile, oilsands producer Suncor Energy Inc. rose 1.8 per cent to $21.45 and pipeline company Enbridge Inc. strengthened by 2.52 per cent to $43.95.
"The market is reacting as though it was a planned explosion of some sort and that's really driving the action in some of the sectors that are winning today," said Archibald.
"The energy names are having a really strong day here and then the gold names are also continuing to power higher on the back of a rising commodity."
Six of the Toronto market's 11 sectors were positive on the day, led by energy, health care and telecommunications.
The biggest losers were industrials and utilities.
Health care bobbed higher after a big selloff in marijuana stocks last Friday, Archibald said, while investors also demonstrated interest in defensive investments in telecommunications and select utilities.
Industrials were driven lower by weakness in Canadian National Railway Co., off $1.02 at $129.82, and Canadian Pacific Railway Ltd., down $6.76 at $361.61.
The two rallied on Friday on unconfirmed reports that a pair of private equity firms were considering buying the Kansas City Southern railroad in the U.S. but drifted lower Tuesday on a lack of news, Archibald said.
Meanwhile, a slump in Alimentation Couche-Tard Inc. shares helped bring down the staples sector when it emerged that its bid for Marathon Petroleum Corp.'s gas-station business had lost out to the private equity owner of 7-Eleven.
Couche-Tard's shares fell 32 cents or 0.69 per cent to $46.23.
The Canadian dollar traded for 74.78 US compared with 74.60 on Friday.
The September copper contract was down 1.75 cents at just over US$2.89 a pound.
Markets were listless south of border as negotiations continued on a new stimulus package to help the economy recover from the COVID-19 pandemic lockdowns.
"We haven't seen any real progress on the file as of yet so I think that's part of the reason why the U.S. markets are pausing here until we get a little more clarity," said Archibald.
In New York, the Dow Jones industrial average was up 164.07 points at 26,828.47.
The S&P 500 index was up 11.90 points at 3,306.51, and the Nasdaq composite was up 38.37 points at a record 10,941.17.
This report by The Canadian Press was first published Aug. 4, 2020.