TORONTO — Canada's main stock index rebounded from last week's losses as higher crude oil and natural gas prices drove the energy sector higher but didn't help the loonie.
"It seems like there is certainly a cyclical tilt in today's trading with energy and materials leading the tape," said Angelo Kourkafas, investment strategist at Edward Jones.
The S&P/TSX composite index closed up 33.35 points to 20,666.41.
In New York, the Dow Jones industrial average snapped a five-day losing streak by gaining 261.91 points at 34,869.63. The S&P 500 index was up 10.15 points at 4,468.73, while the Nasdaq composite was down 9.91 points at 15,105.58.
Crude oil prices moved to a near six-week high after OPEC raised its demand outlook and said it will exceed pre-pandemic levels next year.
The cartel revised up its forecast for demand by 260,000 barrels a day for this year compared to what they were estimating last month and by 1.1 million barrels in 2022, Kourkafas said.
"At the same time we have seen supply disruptions in the Gulf of Mexico and that combination is leading to higher prices," he said in an interview.
The October crude oil contract was up 73 cents at US$70.45 per barrel and the October natural gas contract was up 29.3 cents at US$5.23 per mmBTU.
The Canadian energy sector increased 4.2 per cent and was also helped by Crescent Point Energy Corp. shares surging 14.4 per cent after it announced a hike to its quarterly dividend.
The Calgary-based company will pay three cents per share starting with its payment for the fourth quarter. Crescent slashed its dividend at the start of the pandemic last year to a quarterly rate of 0.25 of a cent per share.
The Canadian dollar traded for 78.98 cents US compared with 79.17 cents US on Friday.
Materials was one of three sectors that ended the day higher as gold prices rose.
The December gold contract was up US$2.30 at US$1,794.40 an ounce and the December copper contract was down 8.5 cents at nearly US$4.37 a pound.
Technology was the biggest laggard on the day, losing 1.5 per cent as shares of Lightspeed fell 4.7 per cent. Industrials was also lower as Canadian National Railway Co. was down 1.9 per cent after Kansas City Southern said a proposal from Canadian Pacific Railway Ltd. was now superior to the one it previously supported from CN.
Investors were cautious to start the trading week as they await U.S. inflation data on Tuesday and Canadian numbers on Wednesday that could suggest how soon the Federal Reserve will begin tapering its bond purchases. U.S retail sales numbers are also being released this week
Kourkafas expects inflation will likely have moderated.
"It seems to us that inflation has peaked, but it will remain sticky while at the same time consumer spending is slowing a bit driven by the pandemic challenges," he said.
Central banks are thinking about tapering their stimulus and that dynamic has created a little bit of nervousness in the market, along with concerns about supply chain disruptions that are more persistent than originally thought and could limit how fast the economy can normalize.
"Bond prices are not going to solve that problem," he said of supply issues. "So it's not a problem that you solve with more quantitative easing and more accommodation from central banks."
Declining consumer confidence is also expected to translate into softer spending, Kourkafas added.
While the headwinds are likely to be temporary, he said markets will experience volatility through September, a historically weak month.
This report by The Canadian Press was first published Sept. 13, 2021.
Companies in this story: (TSX:CNR, TSX:CP, TSX:CPG, TSX:LSPD, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press