TSX on Way Back from Last Week’s Gulch
Equities throughout North America took their cue Monday from positive signals in the banking sector, as bailouts by governments of certain pertinent players in the crisis seemed to provide solutions.
The TSX jumped 131.71 points to close Monday at 19,519.43, after losing nearly 2% last week.
The Canadian dollar gained 0.28 cents to 73.19 cents U.S.
Energy stocks led the parade of winners, with Spartan Delta charging ahead 70 cents, or 5.6%, to $13.30, while Nuvista Energy grabbed 53 cents, or 4.9%, to $11.30.
In communications, Cogeco Communications zoomed $1.32, or 2.1%, to $62.91, while Quebecor moved ahead 60 cents, or 1.9%, to $31.59.
Among materials, Hudbay Minerals tacked on 30 cents, or 4.8%, to $6.51, while Ivanhoe Mines improved 44 cents, or 4%, to $11.57.
Health-care issues quelled this rise, with Canopy Growth faltering 23 cents, or 8.3%, to $2.53, while Tilray stepped back 22 cents, or 6.1%, to $3.38.
In utilities, Algonquin Power and Utilities dropped 29 cents, or 2.7%, to $10.63, while Boralex slipped 73 cents, or 1.9%, to $38.06.
Among industrial plays, Bombardier ducked $2.36, or 3.9%, to $57.51, while Boyd Group shed $4.44, or 2.1%, to $211.31.
The TSX Venture Exchange grabbed 2.2 points to 607.28.
Eight of the 12 TSX subgroups gained ground, led by energy, ahead 2.9%, communications, up 1.3%, and materials improved 0.9%.
The four laggards were weighed most by health-care, down 2.8%, utilities, sliding 0.5%, and industrials, off 0.1%.
Stocks closed higher on Monday as traders grew hopeful that a crisis in the banking sector may be easing. The gains followed a forced takeover of Credit Suisse by UBS engineered by the Swiss government.
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The Dow Jones Industrials popped 382.60 points, or 1.2%, to 32,244.58.
The S&P 500 advanced 34.93 points to 3,951.57.
The NASDAQ Composite gained 45.03 points to 11,675.34.
Regional banks rose on Monday, rebounding from big losses in the past week as the group was forced to shore up their deposit bases in the wake of the collapse of Silicon Valley Bank. Wall Street expects more actions may be needed to restore confidence in the banking system after U.S. regulators backstopped SVB’s uninsured deposits and offered new funding for troubled banks one week ago.
PacWest, First Citizens and Fifth Third Bancorp led the gains. The ETF rose 5% at one point during the trading session, but saw some of its gains reverse as First Republic shares fell 47.28%.
The instability in the financial sector over the past two weeks raises the stakes for the Federal Reserve’s interest rate decision on Wednesday. As of Monday morning, there is about a 57% chance of a quarter-point increase by the Fed, according to CME Group data using fed funds futures contracts as a guide. The other 38% is in the no-hike camp, anticipating that Chairman Jerome Powell may start to ease his aggressive tightening campaign that began in March 2022, in the face of the emerging financial contagion.
UBS agreed to buy Credit Suisse for three billion Swiss francs, or $3.2 billion, with the combined bank to have $5 trillion in assets. Credit Suisse shares were down 21% last week. Shortly after UBS announced its takeover deal, the Fed announced it had joined with other central banks in a joint liquidity operation.
The group of central banks — including the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank — agreed to increase the frequency of their U.S. dollar swap line arrangements from weekly to daily.
Prices for the 10-year Treasury slumped, raising yields to 3.49% from Friday’s 3.42%. Treasury prices and yields move in opposite directions.
Oil prices regained 83 cents to $67.57 U.S. a barrel.
Gold prices moved up $9.80 to $1,983.30 U.S. an ounce.