Canada’s main stock index resumed its climb higher while trading on U.S. stock markets was mixed Thursday as the Commerce Secretary poured cold water on hopes of a quick trade deal with China.
The S&P/TSX composite index ended two down days by closing up 72.45 points at 15,280.78.
The market was led by the health-care sector, which saw several cannabis companies post gains.
Energy rose 1.5% on increases led by Canadian Natural Resources and Suncor Energy Inc. The materials and industrials sectors followed. Canadian Pacific Railway Ltd. gained nearly t3% after posting strong 2018 results that beat expectations.
Great-West Lifeco Inc. was down 4.8% while Rogers Communications shares slipped 2.3% despite raising its dividend for the first time since 2015.
The Canadian stock market has been on a tear in January on a rise in crude oil prices. West Texas Intermediate has risen 25% since its December low but the Canadian market has benefited from a shrinking in the differential for Canadian crude as the price of Western Canadian Select has surged to US$41.62 per barrel from less than US$12 in November.
The March crude contract was up US51¢ at US$53.13 per barrel and the March natural gas contract was up US7.6¢ at US$3.00 per mmBTU.
The market’s appreciation has been directly related to the overselling witnessed in December, says Kash Pashootan, CEO and chief investment officer at First Avenue Investment Counsel Inc.
“We don’t feel that these returns have in any way been motivated by improving economic factors or strong earnings,” he said in an interview.
“That means that once the market does find its new equilibrium and recalibrates — which we feel for the most part that’s taken place — then we get back to the markets going up and down based on the actual fundamentals.”
The Canadian dollar traded for an average of US74.90¢ compared with an average of US74.92¢ US on Wednesday.
The February gold contract was down US$4.20 at US$1,279.80 an ounce and the March copper contract was down US1¢ at US$2.64 a pound.
In New York, the Dow Jones industrial average was down 22.38 points at 24,553.24. The S&P 500 index was up 3.63 points at 2,642.33, while the Nasdaq composite was up 47.69 points at 7,073.46.
The growth in corporate earnings reported so far this quarter has slowed, reinforcing concerns about a slowing global economy, Pashootan said.
U.S. Commerce Secretary Wilbur Ross also reined in optimism about a deal with China when he told CNBC Thursday that the two sides were “miles and miles from getting a resolution.”
Pashootan said those comments add some balance to market optimism about the likelihood of a trade deal between the world’s two largest economies.
“Comments such as the ones we saw today are healthy and help keep the markets in check in terms of not becoming too optimistic without the justification being there.”