- Category: Economic
- Published Monday, February 22, 2016
- CTV News
TORONTO -- Stock markets in Toronto and New York racked up gains Monday amid higher oil prices and renewed investor confidence in global economic growth.
On Bay Street, the S&P/TSX index closed up 32.23 points at 12,845.63 after pulling back from intraday highs.
The commodity-heavy Toronto Stock Exchange got a lift as the April contract for North American benchmark crude settled $1.64 higher at US$33.39 a barrel.
The Canadian dollar also benefited, rising 0.30 of a U.S. cent to 72.93 cents US.
Part of the catalyst for the oil rally was due to a report from the International Energy Agency, which said the pace of global supply growth is dwindling as energy companies slash production to tighten their balance sheets.
"The fact that we're continuing to see those (supply) numbers come down means production is likely going to be reined in," said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis.
"This decline in oil (prices) has been a combination of the supply and demand factors. Slowing Chinese economy has obviously dampened the outlook for demand growth, coupled with production, not only in Canada, but in the U.S. and in parts of the Middle East (that) has continued to increase. That's weighed heavily on markets."
Volatility in the price of oil and in stock markets is expected continue for some time, even though investors have shown optimism in recent weeks compared with the lows seen in equities at the start of the year.
"This rebound is quite warranted. The economics and fundamentals globally are not spectacular but they're not a disaster either," said Fehr, who described the sell-off in January as "overdone."
What will drive the market higher over the long term will be better economic data coming from the U.S. and China, which may lead to better corporate earnings.
"Those are the two key catalysts that will put a floor on this market and probably allow markets to grind higher over time," said Fehr. "In the meantime, volatility is going to remain the key word when it comes to stock prices."
Elsewhere in commodities, March copper shot up four cents to US$2.11 a pound, while April natural gas was virtually unchanged at US$1.86 per mmBtu. The April contract for gold bullion lost some of its shine, falling $20.70 to US$1,210.10 a troy ounce.
In New York, the widely watched Dow Jones industrial average soared 228.67 points or 1.40 per cent to 16,620.66, while the broader S&P 500 added 27.72 points or 1.45 per cent to 1,945.50. The Nasdaq jumped 66.18 points or 1.47 per cent to 4,570.61.