Canada’s main stock index moved higher Thursday as energy stocks surged on a record 25 per cent rise in crude oil prices.
Oil prices jumped after U.S. President Donald Trump tweeted that he expected Saudi Arabia and Russia to cut production by 10 million to 15 million barrels per day.
Such a move would effectively be a ceasefire in the price war between two of the world’s largest oil producers that is partly responsible for a collapse in oil prices. On top of that, China said it was looking to speed up crude oil purchases.
“So that put a huge floor under the oil prices,” said Michael Currie, vice-president and investment adviser at TD Wealth.
The May crude contract was up US$5.01 at US$25.32 per barrel after rising by as much as 35 per cent in intraday trading.
The increase helped the entire energy sector, which gained 9.3 per cent on the day. It was led by MEG Energy Corp., Frontera Energy Corp. and Cenovus Energy Inc., which saw their share prices surge 33.8, 30.7 and 23.2 per cent respectively.
Thursday’s price gain came just days after the commodity price hit an 18-year low. However, it still sits almost 59 per cent below the US$61.18 per barrel level of Dec. 31.
The oil news offset earlier jobless numbers in the United States that were far worse than economists had expected. The U.S. job market has collapsed in two weeks because of the novel coronavirus outbreak, pushing at least 10 million Americans out of work.
That includes 6.6 million claiming unemployment benefits last week, double what economists were expecting and more than twice the record number of claims the prior week.
“That’s huge, huge jobs numbers lost there so that was obviously a negative on the market,” Currie said in an interview.
The S&P/TSX composite index closed up 221.36 points at 13,097.76.
Nine of the 11 major sectors of the TSX were higher with materials gaining 4.3 per cent.
The June gold contract was up US$46.30 at US$1,637.70 an ounce and the May copper contract was up 4.4 cents at US$2.22 a pound.
Kinross Gold Corp. was up 9.5 per cent.
Offsetting the support from commodities were share losses in the technology and consumer discretionary sectors.
Shares of Shopify Inc. plunged 9.7 per cent after the Ottawa-based tech company suspended its 2020 outlook.
Aritizia Inc. was down 5.3 per cent and Restaurant Brands International Inc. was four per cent lower.
In New York, the Dow Jones industrial average was up 469.93 points at 21,413.44. The S&P 500 index was up 56.40 points at 2,526.90, while the Nasdaq composite was up 126.73 points at 7,487.31.
“With the markets holding up positively now I guess people are looking a little bit past the jobless numbers here,” added Currie.
The Canadian dollar traded for 70.53 cents US compared with an average of 70.34 cents US on Wednesday.
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