Energy stocks help S&P/TSX composite rise almost 100 points, U.S. markets move higher

Strength in energy stocks helped Canada’s main stock index gain almost 100 points Monday, while U.S. markets were also higher.

The market boost from what was perceived as a pivot by the U.S. Federal Reserve last week continued into Monday, said Ian Chong, associate portfolio manager at First Avenue Investment Counsel Inc.

“That was kind of like the last potential headwind that we could see into the year end,” he said, adding that on a seasonal basis, December is normally strong.

The S&P/TSX composite index closed up 93.56 points at 20,622.71.

In New York, the Dow Jones industrial average was up 0.86 points at 37,306.02. The S&P 500 index was up 21.37 points at 4,740.56, while the Nasdaq composite was up 90.89 points at 14,904.81.

The rate hold by the U.S. central bank, which projected three rate cuts in 2024, helped markets achieve their seventh straight week of gains.

“It’s amazing that it has been so strong,” said Chong.

The main question for investors going into the new year is when central banks will cut rates, and by how much, he said.

Monday also saw a show of market confidence from some major merger and acquisition news, noted Chong, such as the acquisition of U.S. Steel by Japan’s Nippon Steel.

Shares in U.S. Steel closed more than 26 per cent higher on Monday.

An upward revision of Goldman Sachs’ 2024 S&P target is also a sign of investor confidence, said Chong.

While markets are currently pricing in several more interest rate cuts for 2024 than the Fed projected, the end result may be somewhere in the middle, said Chong.

The Fed’s job is to manage expectations, which can play into investor behaviour, he said.

Canada’s central bank, meanwhile, is dealing with a different landscape heading into 2024, noted Chong.

“It’s pretty impressive what (the U.S. central bank) has done in terms of navigating a soft landing there,” he said.

“Whereas in Canada, a soft landing is not nearly as certain as the U.S., and in fact, we could tip into a recession if we’re not already in one.”

The price of oil rose Monday amid news that companies including BP are halting shipments on the Red Sea due to Houthi attacks.

The Canadian dollar traded for 74.70 cents US compared with 74.75 cents US on Friday.

The February crude oil contract was up US$1.04 at US$72.82 per barrel and the January natural gas contract was up one cent at US$2.50 per mmBTU.

The February gold contract was up US$4.80 at US$2,040.50 an ounce and the March copper contract was down four cents at US$3.85 a pound.

— With files from The Associated Press