TSX ends week higher as crude oil rises on trade truce between U.S. and China

TSX ends week higher as crude oil rises on trade truce between U.S. and China
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TORONTO — Canada’s main stock index capped the week with an upswing Friday as crude oil prices hit their highest level in nearly three months after a partial trade truce between the world’s two largest economies.

The S&P/TSX composite index closed up 56.23 points at 17,003.13 with support from the technology, materials and financials sectors.

In New York, the Dow Jones industrial average was up 3.33 points at 28,135.38. The S&P 500 index was up 0.23 of a point at 3,168.80, while the Nasdaq composite was up 17.56 points at 8,734.88.

Markets responded positively to a in initial deal between the U.S. and China as they negotiate to end a 17-month trade war. The U.S. agreed to drop plans to impose new tariffs on $160 billion of Chinese imports that were to begin Sunday and reduce existing levies in exchange for large Chinese purchases of U.S. agricultural products.

Much of the positive investor sentiment is already baked in even though the three U.S. markets inched up to set new record highs in intraday trading, said Allan Small, senior investment adviser at HollisWealth.

“The market isn’t selling off so its not a sell-the-news kind of event but it’s kind of ho hum, it’s done finally,” he said in an interview.

Investors are concerned about what comes next since key areas of dispute remain unresolved, including intellectual property theft.

The trade deal is also positive for President Donald Trump since it diverts some attention from a committee of the Democrat-controlled House of Representatives that voted Friday to support impeachment proceedings against him.

“He loves that if the focus can go onto trade versus impeachment,” said Small, adding markets aren’t too concerned about impeachment since the Republican-controlled Senate is unlikely to remove Trump from office.

Technology was the biggest winner on the day with Apple Inc. reaching a record high in the U.S. and Shopify Inc. gaining 3.8 per cent in Canada.

Energy was flat even though crude oil moved above US$60 per barrel for the first time since September on optimism that the trade deal will be supportive for global oil demand and OPEC’s commitment to cut supply.

The January crude contract was up 89 cents at US$60.07 per barrel and the January natural gas contract was down 3.2 cents at US$2.30 per mmBTU.

However, Small isn’t sure how much runway is left for oil, saying there will have to be a catalyst of some sort to move oil to US$65 per barrel.

The heavyweight financials sector climbed 0.6 per cent as banking stocks were helped by the 10-year bond yield rising to 1.7 per cent in Canada and Power Corp. shares surging 7.9 per cent after the management and holding company announced a major reorganization that will see brothers Andre and Paul Desmarais Jr. retire from their long-serving roles as co-CEOs.

Materials was up with Turquoise Hill Resources Ltd. gaining nearly 15 per cent as gold prices rose.

The February gold contract was up US$8.90 at US$1,481.20 an ounce and the March copper contract was down 1.55 cents at US$2.78 a pound.

Health care, consumer staples and telecommunications were lower.

The Canadian dollar was unchanged at an average of 75.86 cents US.

This report by The Canadian Press was first published Dec. 13, 2019.

Companies in this story: (TSX:POW, TSX:SHOP, TSX:TRQ, TSX:GSPTSE, TSX:CADUSD)

Ross Marowits, The Canadian Press

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