TSX nears three-week high after financials gets lift from housing report

A TSX tote board is pictured in Toronto, on Dec.31, 2012. THE CANADIAN PRESS/Frank Gunn

TORONTO - North American stock markets closed higher Thursday on new data supporting interest rate cuts, and elevated oil prices prompted by an attack on oil tankers in the Middle East.

The hope of further stimulus by the Federal Reserve through the easing of interest rates was helped by softer U.S. jobs data, said Candice Bangsund, portfolio manager for Fiera Capital.

"Initial jobless claims in the U.S. rose by more than expected, which ultimately boosted speculation for Federal Reserve rate cuts," she said in an interview.

Market watchers have increasingly been anticipating rate cuts to counter a softer economy in the U.S. and around the world. The rise in jobless claims could be another indicator that the world's largest economy is losing steam.

The S&P/TSX composite index underperformed U.S. markets as it closed up 12.02 points to 16,239.26.

In New York, the Dow Jones industrial average was up 101.94 points at 26,106.77. The S&P 500 index was up 11.80 points at 2,891.64, while the Nasdaq composite was up 44.41 points at 7,837.13.

Bangsund said the gap between markets on both sides of the border was surprising because of the large increase in oil prices helped the energy sectors in both countries. She attributed the main difference to the U.S. being the prime beneficiary of lower interest rates.

"Also in Canada, a lot of the larger [oil] producers that make up a bigger component of the energy sector are more integrated in nature so they've got upstream and downstream operations."

The key energy sector gained 0.84 per cent as Crescent Point Energy Corp. shares increased 3.9 per cent followed by Encana Corp.

The July crude contract was up US$1.14 to US$52.28 per barrel and the July natural gas contract was down 6.1 cents at US$2.32 per mmBTU.

Oil future prices rose 2.2 per cent after two oil tankers came under a suspected attack Thursday near the strategic Strait of Hormuz, which the U.S. blamed on Iran's campaign of "escalating tensions" in a region.

The Canadian dollar traded for an average of 75.05 cents US, down from an average of 75.17 cents US on Wednesday.

The consumer discretionary sector was the day's leader, gaining 2.5 per cent as Dollarama shares surged 11 per cent after the discount retailer boosted its sales growth forecast for the year.

Materials was the third best performer as higher metals prices helped Turquoise Hill Resources Ltd. as investors sought safe havens.

The August gold contract was up US$6.90 at US$1,343.70 an ounce and the July copper contract was up 0.25 of a cent at US$2.66 a pound.

"There's just some general nervousness in the market so I think gold's going to continue getting a bid in that environment of heightened nervousness and fragility, quite frankly, but also lower interest rates are also a positive for gold prices," said Bangsund.

Five of the 11 major sectors on the TSX fell, as BCE led telecommunications lower.

Companies in this story: (TSX:CPG, TSX:ECA, TSX:BCE, TSX:TRQ, TSX:GSPTSE, TSX:CADUSD=X)

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