Canada’s main stock index saw an increase on Tuesday, driven by gains in energy and battery metals, as well as a rise in oil prices above US$70 a barrel.
The S&P/TSX composite index rose by 49.58 points to reach 20,204.87, while U.S. stock markets were closed for the Independence Day holiday.
According to Mike Archibald, Vice President and Portfolio Manager with AGF Investments Inc., energy stocks and other commodities played a key role in boosting the TSX on a low-volume day.
As oil prices have been trading between the high 60s and low 70s, the increase above US$70 a barrel on Tuesday comes as no surprise. The price hike follows the announcement by Saudi Arabia and Russia that they will extend July production cuts into August to bolster the oil price.
Archibald mentioned that it remains to be seen if Russia and Saudi Arabia will follow through on their commitment to production cuts, but their announcement has certainly impacted the energy price.
However, oil is caught between the downward pressure of the global economic slowdown and ongoing production cuts. Archibald emphasized that this battle continues.
Looking ahead, the employment data releases in the U.S. and Canada will inform future interest rate decisions by the central banks. Additionally, investors are eagerly awaiting second-quarter reports from U.S. firms in light of the slowing economy.
In recent weeks, there has been a shift towards underperforming market sectors. However, it is uncertain how long-lasting this rotation will be. Archibald suggests that earnings will likely influence the outcome.
He further added, “Financials and energy sectors have performed relatively well in the past week. We will have to see whether this trend continues in the second half of the year.”
The Canadian dollar traded at 75.65 cents US, slightly higher than the 75.53 cents US on Friday.
Meanwhile, the August crude oil contract rose by US$1.21 to reach US$71.00 per barrel in the late afternoon on Tuesday. The August natural gas contract also increased by four cents, settling at US$2.75 per mmBTU.
The August gold contract climbed by US$4.10 to reach US$1,933.60 per ounce, while the September copper contract saw a marginal decrease, settling at US$3.79 per pound.
— With files from The Associated Press
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