The close: TSX at all-time high for third time in a row after energy sector jump

Canada’s main stock index breached its all-time high record, albeit marginally, for a third consecutive session on Monday as energy stocks boosted returns after an early bump in crude oil prices due to geopolitical tensions. Both the S&P 500 and Dow were also up modestly to record peaks.
The S&P/TSX composite index was up 27.34 points, or 0.11%, at 23,894.71, crossing its all-time peak scaled last week after the Federal Reserve rate cut.
Crude oil prices had a volatile day with prices first jumping up on increased Middle east tensions and hopes of strong U.S. economic growth. But it shed the gains later in the day after disappointing euro zone business activity and a signs of a weakening Chinese economy.
Brent crude futures for November were down 0.59% to US$74.05 a barrel by late day, after touching a peak of US$75.17 a barrel earlier in the day.
“There’s still a disconnect between valuations for some of the energy stocks and expectations for where crude oil might trade in the next year,” said Elvis Picardo, senior portfolio manager at iA Private Wealth.
As a result, any signs that crude might go up bumps up the energy companies in TSX, he said.
Canada’s energy sector, which accounts for around 17.5% weight in the composite index, advanced 0.4% in the day led by International Petroleum Corp. and Birchcliff Energy Ltd., both of which were up over 2%.
Last week’s Federal Reserve’s super-sized 50 basis point rate cut had boosted global markets and stock returns.
Traders expect the Fed to cut rates by another 75 basis points by the end of this year and are keeping an eye on several data prints that could provide clues on monetary policy.
“Investors will digest the gains so far before the action starts again in the first or second week of next month with third quarter earnings,” Picardo said.
Attention will be on the Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) and Canada’s gross domestic product numbers for July, both expected on Friday.
The TSX is up 14.1% for the year due to optimism over the Fed’s policy easing and after the Bank of Canada slashed its policy rates three times this year. The Canadian central bank is unanimously expected to cut borrowing costs further at its October meeting.
On Wall Street, comments from three reserve bank presidents were the main focus Monday as investors searched for clues on why the central bank kicked off its easing cycle with an outsized 50 basis-point cut.
Fed officials including Raphael Bostic, Neel Kashkari and Austan Goolsbee supported the central bank’s last rate cut and voiced support for more cuts in the rest of the year.
On the data front, U.S. business activity remained steady in September, while average prices for goods and services increased at the fastest pace in six months, potentially signaling a rise in inflation in the months ahead.
“I think investors are still just sort of taking a wait-and-see attitude, if indeed a soft landing is the most likely outcome.” said Sam Stovall, chief investment strategist of CFRA Research in New York.
The Dow Jones Industrial Average rose 61.29 points, or 0.15%, to 42,124.65, the S&P 500 gained 16.02 points, or 0.28%, to 5,718.57 and the Nasdaq Composite gained 25.95 points, or 0.14%, to 17,974.27.
Eight of the 11 S&P 500 sectors were higher. Energy stocks led gains with a 1.31% rise, while healthcare stocks declined 0.25%.
Among rate-sensitive growth stocks, Tesla jumped 4.65%, while Meta Platforms rose 0.6% after Citigroup lifted its price target on the stock.
The Russell 2000 index, tracking small caps, was off 0.25%.
Among top movers, Intel rose 3.05% after a media report said Apollo offered to make an investment of as much as $5 billion in the chipmaker.
General Motors slipped 1.72% after Bernstein downgraded the carmaker’s stock to “market perform” from “outperform.”
Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE. There were 505 new highs and 36 new lows on the NYSE. The S&P 500 posted 62 new 52-week highs and one new low while the Nasdaq Composite recorded 80 new highs and 123 new lows.
Reuters, Globe staff