Toronto market rebounds as oil climbs to 7-year high – Financial Post

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Reuters

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TORONTO — Canada’s main stock index rose on Tuesday as a seven-year high for oil prices bolstered energy shares and bank stocks benefited from a steeper yield curve, with the index recovering from a two-and-half-month low the day before.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 131.18 points, or 0.7%, at 20,183.43. On Monday, it posted its lowest closing level since July 20.

“Energy stocks are helping to drive the index today,” said Lorne Steinberg, president, Lorne Steinberg Wealth Management Inc.

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The energy group climbed 2.8% as oil rose to its highest level since 2014, supported by the OPEC+ decision on Monday to stick to planned output rises. U.S. crude prices settled 1.7% higher at $78.93 a barrel.

Consumer discretionary stocks added 1%, while financials, which account for about 30% of the Toronto market’s capitalization, were up 0.9%.

“We remain very bullish on banks,” Steinberg said. “They still seem to be a pretty cheap, attractive sector in the market and a huge beneficiary of a steeper yield curve.”

A steeper yield curve, or a wider gap between long-term and short-term rates, helps improve the profit margins of banks.

The gap between the Canadian 2- and 10-year yields widened by 4.1 basis points to 100 basis points in favor of the longer-term bond, the widest gap since June.

Worries around higher inflation and a slowdown in economic growth have rattled investor sentiment in recent weeks. Still, the Toronto market has gained nearly 16% since the start of the year.

Gains for the TSX on Tuesday came as data showed Canada’s trade surplus with the world widening in August to C$1.9 billion.

Canada’s employment report for September is due on Friday, which could offer clues on the Bank of Canada policy outlook. (Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Lisa Shumaker)

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