S&P/TSX composite up despite plunge in oil prices for second Monday in a row

S&P/TSX composite up despite plunge in oil prices for second Monday in a row

TORONTO — Canada’s main stock index started the trading week higher even though the price of oil futures plunged for a second consecutive Monday.

After moving to a historic negative price last week, the crude oil contract dropped nearly 25 per cent on renewed storage concerns amid a supply glut and demand weakened by the COVID-19 pandemic.

“I think oil prices are likely to remain under a fair bit of pressure until one of those two sides of the ledger changes dramatically, either until supply comes down dramatically to fall more in line with demand … or conversely, some additional storage that comes online or demand that picks back up,” said Craig Fehr, investment strategist at Edward Jones.

He said it won’t be known for a few weeks if the June contract will move deeply into negative territory just as May’s contract did a day before its expiry.

“If indeed we’re in a scenario by which there’s no more additional clarity on the uptick in potential demand or no meaningful change in supply or production, we could find ourselves back in a scenario like that, however, several weeks could make a meaningful difference in terms of the outlook for a rebound in the economy,” he said.

The June crude contract was down US$4.16 or 24.6 per cent at US$12.78 per barrel and the June natural gas contract was up 2.1 cents at nearly US$1.92 per mmBTU.

The S&P/TSX composite index closed up 221.75 points or 1.5 per cent at 14,642.11 for the highest closing in nearly seven weeks.

In New York, the Dow Jones industrial average was up 358.51 points at 24,133.78. The S&P 500 index was up 41.74 points at 2,878.48, while the Nasdaq composite was up 95.64 points at 8,730.16.

The primary catalyst for markets moving higher was the start of economic reopenings in several U.S. states.

“I think that’s providing some continued optimism to the market that economic activity is going to start to resume hopefully sooner than later,” Fehr said.

He expects reopenings will likely proceed in “fits and starts” and won’t be completely smooth.

“After declining sharply amid the uncertainty of this virus situation, I think markets are now responding a little bit more positively to the fact that there seems to be a little bit of light at the end of the tunnel.”

The Canadian dollar traded for 71.16 cents US compared with an average of 70.97 cents US on Friday.

Eight of the 11 major sectors on the TSX were higher, led by health care, real estate, utilities and financials.

Health care gained 7.5 per cent with Canopy Growth Corp. and Hexo Corp. rising about 12 per cent.

The heavyweight financials sector was up three per cent with Fairfax Financial Holdings Ltd. up 9.7 per cent and Canada’s largest banks rising between 2.1 to 4.7 per cent.

The energy sector was slightly positive despite the lower crude oil prices. Frontera Energy Corp. shares were up almost 2.5 per cent and Imperial Oil rose 2.05 per cent, while Secure Energy Services Inc. was down 4.5 per cent.

Fehr said that’s because much of the sector’s challenges have already been priced in and large cap names are better positioned to weather the challenge of low prices.

“The underperformance that we’ve seen in the energy sector for an extended period of time now has been pricing in this expectation that there was a lot of pain that still lay ahead for that sector,” he said.

“So the fact that we’re now starting to see energy names at least stabilize or even do a little bit better, even when crude prices are falling, I think is an indication that some pretty negative expectations are already priced into these stocks.”

Materials, technology and consumer staples were lower.

Materials fell slightly with a dip in gold prices.

The June gold contract was down US$11.80 at US$1,723.80 an ounce and the May copper contract was up 1.3 cents at US$2.35 a pound.

This report by The Canadian Press was first published April 27, 2020.


Ross Marowits, The Canadian Press


Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Quality Inn & Suites in Rimbey. Photo Submitted
Rimbey hotel gets new lease on life

The Quality Inn & Suites in Rimbey is now open and taking bookings

Leanne Evans, Rimbey Neighbourhood Place Program Coordinator, accepts a donation of $5,000 from Kevin Maxwell manager of Field Support for Telus. (Photo Submitted)
Rimbey Neighbourhood Place making big changes behind the scenes

Rimbey Neighbourhood Place recently recieved a $5,000 donation from Telus

UPDATE: Suspect identified in early morning shooting

Rimbey RCMP had responded to a complaint of an armed robbery at the Bluffton City General Store

Alberta chief medical officer of health Dr. Deena Hinshaw updates media on the Covid-19 situation in Edmonton on Friday March 20, 2020. nbsp;Alberta is reporting it's highest daily number of COVID-19 cases, with 364 new infections. THE CANADIAN PRESS/Jason Franson
Alberta confirmed 323 COVID-19 cases Tuesday

Central zone active cases at 145

Health Minister Tyler Shandro and Dr. Deena Hinshaw, the chief medical officer of health, receive flu shot. Photo via Government of Alberta
COVID-19: One more death in central zone

Ponoka County on province’s watchlist

Conservative member of Parliament Pierre Poilievre speaks during a press conference on Parliament Hill in Ottawa on October 19, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Liberals say Tory effort to set up COVID-19 committee will be a confidence matter

The Tories were originally proposing an ‘anticorruption’ committee

File photo
RCMP’s response to online discussions about anti-racism demonstrations

Ponoka RCMP Staff Sgt.’s comments misattributed online

Shaelynn Decock and her dog Taco, who has been missing since Aug. 26. Photo Submitted
Sylvan Lake woman looking for closure for her stolen dog

Shaelynn Decock says it has been two months since she last saw her dog Taco

Prime Minister Justin Trudeau is seen during a news conference Tuesday October 20, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Trudeau and his family decide against trick-or-treating this year due to COVID

Adhering to local health authorities, Trudeau urges Canadians to do their part in following those guidelines

Natural Resources Minister Seamus O’Regan responds to a question during Question Period in the House of Commons Tuesday February 4, 2020 in Ottawa. The Alberta government is welcoming news that Ottawa has approved an expansion of the Nova Gas Transmission Ltd. gathering system in Alberta — while condemning federal delays that it says cost this summer’s construction season. THE CANADIAN PRESS/Adrian Wyld
Alberta welcomes federal approval of gas pipeline expansion while criticizing delay

The project is expected to create up to 2,920 direct jobs during construction, the federal release said

A Tim Hortons employee hands out coffee from a drive-through window to a customer in Mississauga, Ont., on March 17, 2020. Tim Hortons is ending the practice of double cupping hot drinks, a move the fast food restaurant says will eliminate hundreds of millions of cups from landfills each year. THE CANADIAN PRESS/Nathan Denette
The end of double cupping: Tim Hortons ditches two cups in favour of one with sleeve

Most recycling facilities in Canada don’t recycle single use paper coffee cups because of a plastic lining

Canada’s Chief Public Health Officer doctor Theresa Tam responds to a question during a news conference Tuesday October 20, 2020 in Ottawa. Canada’s chief public health doctor says in the age of social media, fake news about the COVID-19 pandemic has been spreading faster than the virus itself. THE CANADIAN PRESS/Adrian Wyld
VIDEO: Fake news creates serious issues for battling pandemic, chief public health doc says

Both Tam and Prime Minister Justin Trudeau urged Canadians to be responsible about the information they share

A narwhal tusk that was donated to a Goodwill store in northwest Calgary this summer will soon be gifted to the Arctic Institute of North America (Hesam Rezaei)
Narwhal tusk discovered in Calgary Goodwill pile to be donated to university

The tusk had federal hunting tags from 1978 attached that say animal was harvested from the central Arctic

(The Canadian Press)
Alberta-raised Cree actor lands role in Disney’s live-action ‘Peter Pan and Wendy’

Tiger Lily is featured in Disney’s 1953 animated “Peter Pan” film

Most Read