Canada’s main stock index jumped higher on Tuesday, boosted by gains in energy companies as oil prices rose.
The Toronto Stock Exchange’s S&P/TSX composite index rose 113.73 points, or 0.71 per cent, at 16,196.04.
Energy stocks increased 2.6 per cent, led by a 4.5-per-cent rise in Encana Corp. Crescent Point Energy Corp. was up 3.6 per cent, while Canadian Natural Resources Ltd. increased 3.2 per cent and Suncor Energy Inc. finished 3.1 per cent higher.
Seven of the index’s 11 major sectors were higher, led by a 6.1-per-cent rise in the healthcare sector.
Aurora Cannabis Inc. rose 10.4 per cent after announcing on Tuesday it had not partnered with any beverage company, responding to a media report that Coca-Cola Co was in talks with the Canadian weed producer to make marijuana infused drinks.
Rivals Canopy Growth Corp. and Aphria Inc. jumped 6.5 per cent and 6.6 per cent, respectively.
Lagging stocks included Interfor Corp., down 5.6 per cent, West Fraser Timber Co Ltd., down 4.9 per cent, and Canfor Corp., lower by 4.9 per cent.
The Canadian dollar strengthened to a nearly three-week high against its U.S. counterpart on Tuesday as stock and oil prices climbed, while domestic manufacturing data supported the view the Bank of Canada would raise interest rates in October.
The Canadian dollar was trading 0.4 per cent higher at 1.2985 to the greenback, or 77.01 U.S. cents. The currency touched its strongest level since Aug. 30 at 1.2972.
Gains for the loonie came as investors on Wall Street shrugged off escalating trade rhetoric between the United States and China.
“We are seeing a rebound in risk appetite and the Canadian dollar is getting dragged along with that,” said Scott Smith, managing partner at Viewpoint Investment Partners.
Global equity markets rallied on Tuesday as the latest tit-for-tat U.S.-Chinese trade dispute was seen as barely denting world growth, while U.S. Treasury yields rose in anticipation the Federal Reserve will hike interest rates this year and next.
China said it will levy tariffs on about $60 billion worth of U.S. goods, as previously planned, but cut the level of tariffs it will collect. U.S. President Donald Trump on Monday said 10-per-cent tariffs on $200 billion of Chinese products will start next week and reach 25 per cent by year-end.
MSCI’s gauge of stocks across the globe gained 0.48 per cent. Chinese shares initially slid as investors in Asia digested the details of China’s response but then rallied to push the blue-chip CSI index up 2 per cent.
China has limited retaliatory levers it can pull on the tariff front, said Anthony Saglimbene, global market strategist at Ameriprise Financial Services in Troy, Michigan.
Any escalation is likely to involve its currency or making it harder for U.S. companies to operate in China, but the immediate dent on the economic picture is likely to be small, he said.
“We anticipate this last round of tariffs, the $200 billion, it’s only probably going to add 0.2 percentage points to consumer prices. That’s nothing,” Saglimbene said.
“The market is smart and it’s sniffing out through the end of the year the tariff impact is likely to be small on economic growth and it’s small on corporate profits,” he added.
The United States took 300 consumer products off its original list of products to receive tariff hikes, which will blunt the impact on the consumer, Saglimbene said.
Dutch bank ING estimated that 2.5 per cent of world trade was now affected by the tariffs and it will be 4 per cent if Trump carries out threats to put levies on all Chinese imports.
In Europe, the pan-regional FTSEurofirst 300 index of leading shares closed up 0.15 per cent. Wall Street rallied.
The Dow Jones Industrial Average rose 184.84 points, or 0.71 per cent, to 26,246.96. The S&P 500 gained 15.51 points, or 0.54 per cent, to 2,904.31 and the Nasdaq Composite added 60.32 points, or 0.76 per cent, to 7,956.11.
MSCI’s 24-country emerging market index was up for the fourth day in the last five.
Despite all the noise, the widely tracked dollar currency index rose 0.14 per cent, with the euro slid 0.16 per cent to $1.1664.
The Japanese yen weakened 0.43 per cent versus the greenback at 112.31 per dollar.
U.S. benchmark 10-year and 30-year yields both climbed to fresh four-month peaks as investors continued to price in more interest rate increases by the Fed this year and next.
Benchmark 10-year notes fell 13/32 in price to lift its yield to 3.0514 per cent.
In Europe, Italian government bond yields fell sharply on growing optimism that Italy’s new coalition budget will respect European Union rules on fiscal discipline.
Two- and five-year yields fell as much as 15 basis points to their lowest levels since July, while yields on short-dated top-rated German debt rose to four-month highs.
Oil rose almost $1 a barrel on signs the Organization of the Petroleum Exporting Countries would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signaled it was in no rush to bring prices down.
Oil futures rose more than 1 per cent on Tuesday on signs that OPEC would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signaled an informal target near current levels.
Brent crude futures rose 98 cents to settle at $79.03 a barrel, a 1.26-per-cent gain.
U.S. West Texas Intermediate (WTI) crude futures rose 94 cents to settle at $69.85 a barrel, a 1.36-per-cent gain.
Ministers from the Organization of the Petroleum Exporting Countries and non-OPEC producers meet on Sunday to discuss compliance with output policies. OPEC sources have told Reuters no immediate action was planned and producers would discuss how to share a previously agreed output increase.
Bloomberg reported on Tuesday, citing unnamed Saudi sources, that the kingdom was currently comfortable with prices above $80 per barrel, at least for the short term.
Bloomberg reported that while Saudi Arabia had no desire to push prices higher than $80, it may no longer be possible to avoid it. U.S. sanctions affecting Iran’s petroleum sector are due to come into force from Nov. 4.
Reuters previously reported that Saudi Arabia wants oil to stay between $70 and $80 a barrel for now, as the world’s biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until U.S. congressional elections.
Russian Energy Minister Alexander Novak said an oil price between $70 and $80 was temporary and sanctions-driven, adding the long-term price would stand around $50 a barrel.
U.S. Energy Secretary Rick Perry said last week in Moscow that he did not foresee any price spikes once sanctions came into effect, and was positive about Saudi output.
Oil futures also drew support from geopolitical risk on Tuesday.
Russia’s Defense Ministry said a Russian military plane was shot down by Syrian anti-aircraft systems, but accused Israel of indirectly causing the incident, saying Israeli jets nearby had put the Russian plane in the path of danger.
Russia has told Israel it will take all necessary measures to protect its military personnel in Syria, the Foreign Ministry in Moscow said.
Market participants awaited industry data on Tuesday from the American Petroleum Institute that was expected to show U.S. crude inventories last week fell for a fifth straight week. The data is due to be released at 4:30 p.m. EDT (2030 GMT), while the government’s weekly report is due on Wednesday.