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S&P/TSX composite rises to another record close, loonie and metals prices strengthen

·4 min read

TORONTO — Overflowing investor optimism that the pandemic's gloom will soon lift pushed Canada's main stock index and two of three indexes in the United States to record closes on Friday.

The S&P/TSX composite index was up 29.40 points at 19,351.32, a gain of 123.29 points for the week.

In New York, the Dow Jones industrial average was up 164.68 points at a record 34,200.67 and the S&P 500 index gained 15.05 points at a record 4,185.47. Meanwhile, the Nasdaq composite was up 13.58 points at 14,052.34.

"We've had a good week of economic data that for the most part has been a surprise to the upside, whether it be the regional manufacturing data, whether it's the retail sales, today we had housing starts," said Philip Petursson, chief investment strategist at Manulife Investment Management.

"So that does reaffirm the positive tone toward the economic reopening we're seeing in the United States that's probably going to cascade around the world as the vaccinations continue to increase in availability.

"Around the world, you're seeing a similar trend, strength in equity markets backed by an economic recovery that's emerging that's going to drive earnings growth significantly higher."

The upcoming Canadian federal budget on Monday has had a muted effect on markets so far, mainly seen in bond yields, Petursson said.

"We'll be paying attention to any fiscal support to the consumer," he said.

"The lockdowns have taken a bit of a toll on confidence and, in order to have a good recovery ... there will need to be some kind of support."

Homebuilder stocks were broadly higher in the U.S. after the Commerce Department said home construction rebounded strongly in March to the fastest pace since 2006 and that applications for building permits, a sign of future activity, increased by 2.7 per cent to a seasonally adjusted annual rate of 1.77 million units.

A tick up in U.S. bond yields helped lift bank stocks. Health-care companies and those that rely directly on consumer spending also pushed the market higher.

The Canadian dollar traded for 79.98 cents US Friday compared with 79.81 cents US on Thursday.

Petursson said the loonie is catching up to where it should be in relation to the oil price.

"The Canadian dollar has been one of the strongest currencies relative to the U.S. dollar, if not the strongest year-to-date," he said.

"We see oil prices sustaining at this level and what that means is the gap between where the Canadian dollar is and where it should be based on today's oil price leads us to between 81 and 83 cents."

Above 82 cents, he said, the Bank of Canada gets nervous due to the impact on manufactured exports, but it may have to tolerate it because it can't lower rates much below current levels.

The June crude oil contract slipped 32 cents to US$63.19 per barrel and the May natural gas contract was up two cents at US$2.68 per mmBTU.

The June gold contract was up US$13.40 at US$1,780.20 an ounce and the May copper contract was down five cents at US$4.17 a pound.

In Toronto, seven of 11 sectors were up on Friday, led by telecommunications, health care and materials.

In the wake of a CRTC ruling Thursday providing new restrictions on Canada's telecommunications providers, Rogers Communications Inc. rose 0.83 per cent, Telus Corp. was up 1.16 per cent and Shaw Communications (subject of a proposed Rogers takeover) jumped 1.57 per cent.

In health care, Aphria Inc. rose 4.06 per cent after Tilray Inc. delayed a shareholders vote on a merger with Aphria.

Forestry companies led the materials sector higher, as prices for lumber and other building products continue to reach new heights. Canfor Corp. was up 7.13 per cent, Interfor Corp. ahead by 5.73 per cent and Cascades Inc. up 5.14 per cent on Friday.

The energy sector was the biggest loser, down 0.79 per cent, as Vermilion Energy Inc. fell 4.05 per cent, Crescent Point Energy Corp. lost 2.83 per cent and PrairieSky Royalty Ltd., which reports first quarter results Monday, fell by 2.45 per cent.

-- By Dan Healing in Calgary.

This report by The Canadian Press was first published April 16, 2021.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X, TSX:RCI.B, TSX:T, TSX:CJR.B, TSX:VET, TSX:CPG, TSX:PSK, TSX:APHA)

The Canadian Press