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This article was published 5/12/2018 (316 days ago), so information in it may no longer be current.
TORONTO - Canada's main stock index rebounded Wednesday on strong growth in the key energy sector, while the Canadian dollar fell to its lowest level in 18 months following the Bank of Canada's decision not to change interest rates.
The energy sector led by gaining 2.6 per cent on the day followed by materials and industrials, which together account for 40 per cent of the Toronto Stock Exchange. Health care fell more than six per cent on large decreases for cannabis producers Aphria Inc., Aurora Cannabis Inc. and Canopy Growth Corp.
The S&P/TSX composite index closed up 119.05 points to 15,182.64, partially making up for Tuesday's 211-point drop.
The market rose strongly in morning trading to reach a high of 15,253.77 on 180 million shares changing hands.
Markets fell Tuesday after U.S. President Donald Trump indicated his affinity for tariffs. But excitement rose overnight after China said it was optimistic about a trade deal being worked out during the 90-day truce agreed to last weekend by the leaders of both countries, says Michael Currie, vice-president and investment adviser at TD Wealth.
"That got people a little bit excited and I think that's carrying over to help the global growth story that's been pretty weak lately and that's really going to help the energy sector," he said in an interview.
Several Canadian energy companies got a boost Wednesday with Canadian Natural Resources Ltd. rising 4.2 per cent, Suncor Energy Inc. 3.3 per cent, Imperial Oil Ltd. 3.1 per cent and Cenovus Energy Inc. 2.88 per cent.Advertisement
In addition to hope about global growth, investors anticipate that OPEC countries will agree to cut oil production at its meeting Thursday. There is also a carryover from Alberta's decision to cut production levels, he said.
The January crude contract was down 36 cents at US$52.89 per barrel and the January natural gas contract was up 1.2 cents at US$4.47 per mmBTU.
The February gold contract was down $4 at US$1,242.60 per ounce and the March copper contract was up 1.5 cents at $2.77 a pound.
The Canadian dollar traded at an average of 74.89 cents US, the lowest level since June 2017 and down from an average of 75.65 cents US on Tuesday.
The loonie fell after the Bank of Canada maintained its trend-setting rate at 1.75 per cent and governor Stephen Poloz took a more dovish tone that reduced betting on a hike in January.
"The talk from the Bank of Canada seems to be targeting three more rate hikes through the end of 2019," Currie said. "People are betting their money on two."
A slower pace of interest rate increases hurts the loonie because that makes Canada a less attractive place for people outside the country to invest in Canada, he added.
"So if they're expecting rates not to be as high they're less inclined to invest here. They may be able to get better rates somewhere else."
In New York, stock markets were closed Wednesday to mark the death of former president George H.W. Bush last week.
Currie said U.S. markets should see a bounce on Thursday from China's trade comments unless "something crazy" happens overnight.
Companies, index and currency in this story: (TSX:CNQ, TSX:IMO, TSX:SU, TSX:CVE, TSX:APHA, TSX:WEED, TSX:ACB; TSX:GSPTSE, TSX:CADUSD)