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Financial, energy sectors lead Toronto market higher, U.S. markets also trade up


TORONTO — North American markets closed the week up with a late-day surge, while the loonie rose against the U.S. dollar.

The climb in markets was likely sparked by news of promising results from a COVID-19 treatment as well as some encouraging statistics out of places like New York and Italy, said Erik Bregar, head of currency strategy at the Exchange Bank of Canada.

He said, however, that he doesn't quite understand the stubborn risk-on trade, and noted that the bond market is not showing the same optimism.

"We've seen a lot of competing narratives this week. There's really something for everybody to chew on."

There is still uncertainty as to the outbreak and when economies will open up, leading to significant swings in the market. The S&P/TSX composite index for example jumped 200 points in the last hour of trading Friday.

"It's creating enough volatility for both bulls and bears to be right in one trading session," said Bregar.

In the end the S&P/TSX composite index closed up 460.56 points at 14,359.88 as energy and finance stocks rebounded from a day earlier.

Financials rose 4.52 per cent, a day after banks dropped in part on worries about potential declines in the real estate sector.

The energy index rose 8.29 per cent, as Canadian Natural Resources Ltd. saw a 11.38 per cent gain, Suncor Energy Inc. was up six per cent, and Pembina Pipeline Corp. up 6.45 per cent.

Energy stocks were up despite another down day for oil, as the federal government announced a $1.7-billion program to help the oil and gas sector clean up abandoned wells.

The June crude contract ended down 50 cents at US$25.03 per barrel, and the May contract was down $1.60 to US$18.27, as investors grapple with an expected 30-million barrel a day drop in demand for April.

"Oil markets are pricing in demand destruction, and that's very real," said Bregar. 

The Canadian dollar also shrugged off the drop in oil prices, trading for 71.24 cents US compared with an average of 70.81 cents US on Thursday.

The movement of the loonie is much more closely linked to what the U.S. dollar is doing these days, as investors buy U.S. dollars when they start to worry and sell when they're a little less, said Bregar.

"So, what's the king dollar doing worldwide today. It's responding to broad risk on risk off sentiment."

Gold stocks declined, including a 6.68 per cent drop for Kirkland Lake and a 7.83 per cent decline for Teranga Gold Corp. as the June gold contract closed down US$32.90 at US$1,698.80 an ounce.

In New York, the Dow Jones industrial average closed up 704.81 points at 24,24.49. The S&P 500 index was up 75.01 points at 2,874.56, while the Nasdaq composite was up 117.78 points at 8,650.14.

The May natural gas contract was up 6.7 cents at nearly US$1.75 mmBTU and the May copper contract was up 5.4 cents at US$2.35 a pound.

This report by The Canadian Press was first published April 17, 2020.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)


The Canadian Press

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