TORONTO — Canada's main stock index set another 2019 high Friday on gains by the energy sector and a strong start to first-quarter results in the banking sector.
The S&P/TSX composite index closed up 81.06 points at 16,480.53, after reaching 16,487.14 shortly after the open. That's just a half a percentage point off the all-time high set last summer.
The market was driven by a strong performance from the energy sector on the back of higher oil prices and a blockbuster US$33-billion acquisition of Anadarko Petroleum by Chevron, the largest such deal in a decade, says Cavan Yie, a portfolio manager at Manulife Asset Management.
"So that's a pretty big vote of confidence for the sector where you see a global energy company plowing that much capital and taking that much of a bet on an investment in this point in the cycle," he said in an interview.
The energy sector was led by Encana Corp. and Crescent Point Energy Corp, which rose 5.33 and 5.22 per cent respectively.
The transaction also helped market sentiment as whole, he noted, as all 11 major sectors gained ground.
Oil prices rose with the May crude contract up 31 cents at US$63.89 per barrel and the natural gas contract was down 0.4 of a cent at $2.66 per mmBTU.
The influential financials sector also gained on the day after J.P. Morgan and Wells Fargo got the quarterly results rolling by beating analyst forecasts after posting solid profits. Toronto-Dominion Bank was up 1.07 per cent, followed by the National Bank of Canada.
"Potentially you're seeing perhaps the markets saying that the results might be stronger across the board than expected," Yie said.
Analysts had predicted that overall U.S. corporate earnings would decrease about 2.5 per cent on the S&P 500 for the first year-over-year fall in about three years.
Yie said gains this year in Canada have been driven by the two sectors that have been huge laggards over the past year or two.
"You're seeing a big catch up to start the year which is why you're seeing the TSX outperforming many other developed indices globally."
The Toronto market rose for the 13th week of 2019, gaining 15 per cent year-to-date and up almost 20 per cent from December's low.
U.S. markets have similarly recovered and are nearing new highs.
Yie said there's more room to run because of the supportive interest rate environment.
"If we are in a Goldilocks situation where inflation is not going to spiral out of control, interest rates stay low and growth remains in a positive and healthy range, I think that's a good environment for equities."
In New York, the Dow Jones industrial average was up 269.25 points at 26,412.30. The S&P 500 index was up 19.09 points at 2,907.41, while the Nasdaq composite was up 36.80 at 7,984.16.
The Canadian dollar traded at an average of 75.02 cents US, up from an average of 74.75 cents US on Thursday.
The June gold contract was up $1.90 at $1,295.20 an ounce and the May copper contract was up 5.9 cents at US$2.95 a pound.
Index and currency in this story: (TSX:ECA, TSX:CPG, TSX:TD, TSX:NA, TSX:GSPTSE, TSX:CADUSD)