S&P/TSX composite edges slightly higher as oil price rises
Gains in the energy and mining sectors helped push the main Canadian stock index into slightly positive territory on Tuesday, outweighing the negative impact of Scotiabank’s worse-than-expected third-quarter financial results.
The composite S&P/TSX index closed 10.43 points higher at 19,985.35. Immediately after the opening bell, the TSX jumped, helped in part by energy stocks that benefited from Tuesday’s rise in crude oil prices.
The US benchmark West Texas Intermediate was trading at $93.60 on Tuesday, up more than three and a half percent — an indication that global energy supply concerns are not likely to subside anytime soon, despite WTI’s pullback this month from its spring highs.
READ MORE: Suncor Reports Profits of $2.95 Billion as Oil Prices Rise
“There’s been a bit of a tug-of-war on energy,” said Philip Petursson, chief investment strategist at IG Wealth Management.
“You’ve had investors say, ‘How far can it (the price of oil) go? Is it finished?’ But if you look at the fundamentals, the oil markets are still very tight. I think the long-term outlook for oil is higher, and I think the market is coming to that conclusion.”
The S&P/TSX energy index rose 3.02 percent at the end of the day, while the capped materials index, made up of Canadian mining and metals stocks, rose 2.39 percent.
However, the S&P/TSX composite as a whole lost much of its early morning gains during the day, partly due to the performance of Scotiabank, which lost 5.25 percent of its share value on Tuesday’s earnings announcement. about the third quarter. .
While Scotiabank reported net income of $2.59 billion for the quarter ended July 31, up from $2.54 billion in the year-ago quarter, adjusted earnings of $2.10 per diluted share came below analyst expectations of $2.54 billion. 2.11 per share.
The bank’s global asset management and global banking and markets divisions saw revenues decline, by 14 percent and 26 percent, respectively.
“(Scotiabank) is almost single-handedly bringing the market down,” Petursson said. “And it’s pulling some of the other banks down with it, fearing that some of the weakness we’re seeing on Scotiabank could be coming from some of the other banks as well.”
READ MORE: Scotiabank Reports Q3 Earnings of $2.59 Billion, Up $2.54 Billion in Year-Year Year Q3
In New York, markets were largely flat on Tuesday after a significant drop the previous day amid lingering inflation fears.
The Dow Jones industrial average closed 154.02 points at 32,909.59 on Tuesday. The S&P 500 index closed 9.26 points lower at 4,128.73, while the Nasdaq composite closed 0.27 points at 12,381.30.
Petursson called Tuesday a “grubby” day for Wall Street, adding that investors seem to be waiting in a set pattern for Friday’s meeting of the US Federal Reserve in Jackson Hole, Wyo.
All eyes are on that meeting, he added, to see if Fed Chair Jerome Powell makes any comments that could indicate what the US central bank plans to do to tackle inflation that remains stubbornly high, well over above its target.
“I think the market is holding onto hopes that the Fed is nearing the end of its rate hike cycle. That’s what’s been priced in since the June (market) lows, and we’re just looking for further confirmation of that,” said Petursson.
He added that while investors now feel that the economy is heading into a weaker phase, markets will remain volatile until there is more certainty about the degree of weakness.
“The question now is, ‘Is it just a mild recession, is it a soft landing, or is it something deeper than that?'” Petursson said. “My view is that the Fed could be close to a soft landing, or a very, very mild recession, but we just need the economic data to continue to confirm that.”
The Canadian dollar traded for 77.09 cents in the US against 76.72 cents in the US on Monday.
The October crude contract rose US$3.38 to US$93.74 a barrel and the September natural gas contract declined 49 cents to US$9.19 per mmBTU.
The December gold contract rose $12.80 to $1,761.20 an ounce and the September copper contract rose four cents to $3.70 a pound.
