Wednesday, 11 March 2015 21:27
TORONTO: Canada’s main stock index won back marginal gains on Wednesday, with oil and gas stocks bouncing back in line with a rise in the price of Brent crude oil.
The index had lost more than 3 percent in the prior three sessions as investors’ bets on a Federal Reserve interest rate hike boosted the US dollar and hit commodity prices. Canada is a major exporter of commodities such as oil and lumber.
Brent prices rose on Wednesday, and shares in major Canadian producers followed, with Suncor Energy Inc up 1.3 percent at C$ 35.99 and Canadian Natural Resources Ltd adding 0.7 percent to C$ 36.63.
Crescent Point Energy gained 2.4 percent to C$ 28.36 after reporting a jump in production.
But one long-term investor said the tide had not yet turned for commodities and investors should be cautious, especially given the handful of companies issuing new stock recently.
“People are chomping at the bit to put money back in, they’re all looking for bargains,” said Norman Levine, managing director at Portfolio Management Corp. “It’s way too early, you’re going to get burned.”
US crude prices, meanwhile, hit a one-month low after government data showed higher oil inventories in the United States, contrary to some expectations for a draw.
The Toronto Stock Exchange’s S&P/TSX composite index was up 60.80 points, or 0.42 percent, at 14,702.56 by late morning, with eight of 10 main sectors rising. The index hit a five-week low on Tuesday.
Levine said investors would be wise to look at lumber stocks pushed lower by weak housing data, and life insurance companies that will benefit from rates eventually rising.
Valeant Pharmaceuticals International was having the single biggest positive impact, up 1.5 percent at C$ 259.33.
The company is raising almost $ 10 billion in debt this week to finance its acquisition of Salix, according to a Tuesday report from IFR, a Thomson Reuters publication.
Copyright Reuters, 2015
