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Oil prices jump helping TSX post biggest gains since September

Pumpjacks pump crude oil near Halkirk, Alta., June 20, 2007. An oilfield services company that laid off almost two-thirds of its workers over the past two years is now warning it can't find enough new staff to take full advantage of a recent increase in activity.
Pumpjacks pump crude oil near Halkirk, Alta., June 20, 2007. An oilfield services company that laid off almost two-thirds of its workers over the past two years is now warning it can't find enough new staff to take full advantage of a recent increase in activity. THE CANADIAN PRESS/Larry MacDougal

TORONTO – Canada’s benchmark stock index on Tuesday notched its biggest gain since September, led by energy as oil jumped, while gold miners and defensive stocks pared some recent losses as investors weighed an uncertain outlook for U.S. economic policy.

Expectations that U.S. President-elect Donald Trump will cut taxes, increase spending and accelerate inflation have lifted assets including the U.S. dollar, bank stocks and industrial metals, and driven bond yields higher.

“The uncertainty that Trump brings to the picture meant that your most frothy asset class sells off and that for the longest time has been rates,” said Ben Jang, portfolio manager at Nicola Wealth Management.

However, some sectors that benefit most from a low interest rate environment, including utilities, telecoms and consumer staples recovered some lost ground as the market reassessed the ease with which Trump will be able to deliver on his policies.

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“People look at the policies and say that it is going to be hard … to get infrastructure spending to the amount that Trump wants, it is going to be hard to come up with healthcare reform,” Jang said.

The Toronto Stock Exchange’s S&P/TSX composite index closed up 157.65 points, or 1.08 percent, at 14,756.10. It was the index’s biggest percentage gain since Sept. 28.

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The most influential gainers included its biggest energy producers, with Suncor Energy Inc rising 3.9 percent to C$41.34 and Canadian Natural Resources Ltd advancing 2.3 percent to C$42.74.

The energy group climbed 3.4 percent as oil prices bounced back from multi-month lows on expectations that OPEC will agree this month to cut production to reduce a persistent glut.

U.S. crude prices settled $2.49 higher at $45.81 a barrel.

The materials group, which includes precious and base metals miners and fertilizer companies, added 2.8 percent as gold rebounded from a three-day losing streak while investors sought more detail on the economic policies of Trump.

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Shares in Valeant Pharmaceuticals International Inc rose 3.2 percent to C$24.55. Its chief executive said it has received offers for some core assets.

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The financials group was the lone sector to decline. It fell 0.3 percent as a push higher in global bond yields lost some momentum, with Toronto-Dominion Bank down 0.8 percent to C$62.40.

Insurer Manulife Financial Corp declined 0.4 percent to C$23.06 after four days of sharp gains took the stock to its highest since August 2015.

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