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Rebound in energy prices pushes North American stock markets higher

TORONTO – North American stock markets surged Thursday in a broad rally led by the energy sector as crude oil prices rebounded from two days of weakness.

Markets got off to a good start following a report that China is preparing to inject US$220 billion in stimulus along with infrastructure spending.

“It certainly helped start the day with a risk-oriented tone,” said Mike Archibald, vice president and portfolio manager at AGF Investments Inc.

This helped push copper prices up almost 5% after coming under pressure on worries about slowing economic growth.

“It’s really lighting a fire under all the base metals companies,” he said in an interview, as a weaker US dollar also helped all commodities, including metal and oil prices.

The August gold contract was up US$3.20 at US$1,739.70 an ounce and the September copper contract was up 16.4 cents at US$3.57 per pound .

The shares of First Quantum Minerals Ltd. rose 10.8% while Capstone Mining Corp. increased by 9.9%.

The Canadian dollar was trading at 77.01 cents US against 76.65 cents US on Wednesday.

Telecommunications was the only sector on the TSX not to end higher, with energy leading with a 4.5% rise due to higher crude oil prices and a 14.2% jump in gas prices natural.

The August crude contract rose US$4.20 to US$102.73 per barrel and the August natural gas contract rose 78.7 cents to US$6.30 per mmBTU.

Advantage Oil & Gas Ltd rose 13.4% while Crescent Point Energy Corp. rose 13.1% after increasing its quarterly dividend for the second time in less than two months.

Six of the sectors rose more than 2%, with cyclical sectors benefiting from the gains.

Technology grew 3.0% while Shopify Inc. grew 6.4%. Aritzia Inc. climbed 7.6% to lift consumer discretionary on the day.

Overall, the S&P/TSX Composite Index closed up 333.51 points or 1.8% at 19,063.17, ending a two-day losing streak.

In New York, the Dow Jones industrial average rose 346.87 points to 31,384.55. The S&P 500 index rose 57.54 points to 3,902.62, while the Nasdaq composite rose 259.50 points or 2.3% to 11,621.35.

Markets also welcomed remarks from two Federal Reserve officials, who followed the minutes of the central bank’s latest meeting on Wednesday, to reaffirm that upcoming rate hikes will not be incrementally hawkish, at least during the next two meetings.

Governor Christopher Waller and St. Louis Fed President James Bullard have both said they support another 75 basis point hike this month to rein in inflation, while Waller said that he thought the US economy was on solid footing and could avoid a recession.

That outlook was pushed back by data on jobless claims that were slightly higher last week, a day before the release of jobs reports in both countries.

The Royal Bank also released a report suggesting that Canada is heading for a recession in 2023, but it will be short-lived and not as severe as previous recessions.

Whether or not recessions occur, economies slow due to rising interest rates.

“We’re coming to a point where we’re starting to see some positive signs of inflation peaking or definitely slowing,” Archibald said, pointing to slowing job growth, slowing consumption and weakening inflation. markets.

“It’s been tough for 2022 to start the first half, but it feels like we’re getting a bit closer to the end of the hiking cycle.”

Despite the market gains, Archibald warned that trading volumes were very low on bull days and large on bear days, which could be a negative signal.

“It always tells me there’s a lack of belief that we’ve bottomed out in broader markets,” he said. “Until we see that with conviction on volume, I’m a little less certain that we’re somehow past the worst of the year.”

This report from The Canadian Press was first published on July 7, 2022.



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