Canada’s main stock index rose slightly Thursday a day after posting its largest gain in nearly three years as the key energy sector benefited from higher crude oil prices.
“Today you’re seeing the hangover of renewed market enthusiasm from yesterday’s U.S. Fed comments,” says Kash Pashootan, CEO and chief investment officer at First Avenue Investment Counsel Inc.
Markets rallied Wednesday afternoon after Fed Chairman Jerome Powell said in a speech that U.S. interest rates are close to reaching normal, a more dovish view than a month earlier when he said the country was a long way from normal.
The S&P/TSX composite index closed up 227.16 points Wednesday for its largest single-day gain since Feb. 17, 2016. The Dow Jones industrial average had its best performance in eight months by gaining 2.5% or 617.70 points.
“It was a big move to the upside in one session and what you’re seeing today is really just a hangover from the partying that the market did yesterday,” Pashootan said in an interview.
On Thursday, the S&P/TSX composite index closed up 22.79 points to 15,194.04.
The energy sector led the way, gaining 1.7%, followed by consumer staples. The cannabis-heavy health-care sector led on the downside, losing 1.77%.
Energy shares rose as the January crude contract was up US$1.16 at US$51.45 per barrel as a report suggested Russia may be ready to join a Saudi-led oil production cut.
Crude prices have fallen 30% in the last quarter.
“The oil market has been decimated in the last quarter and it’s just grasping for straws, it’s just looking for any reason to justify a higher price,” said Pashootan.
In New York, the Dow Jones industrial average lost 27.59 points to 25,338.84. The S&P 500 index was down 5.99 points at 2,737.80, while the Nasdaq composite fell 18.51 points to 7,273.08.
The Canadian dollar traded at an average of US75.33¢ compared with an average of US75.18¢ on Wednesday.
The January natural gas contract was down US5.3¢ at US$4.65 per mmBTU.
The February gold contract was up US60¢ at US$1,230.40 an ounce and the March copper contract was down US2.4¢ at US$2.79 a pound.