S&P/TSX composite index rises on the back of higher commodities

TORONTO — Canada’s main stock index lost its early mojo, but still closed higher Thursday as volatility continued to grip markets.

Markets lost some of their early momentum, but turned higher by the end of trading.

Commodities drove gains after losing ground Wednesday, while sectors like utilities, telecommunications and consumer staples did better after lagging the day before.

Mike Archibald, vice-president and portfolio manager with AGF Investments Inc., expects the market volatility to last through the fall.

“Clearly, September has not been a great month and we’ve seen a pullback in most assets, particularly the kind of high-flying stocks that had done quite well, so technology and resources,” he said in an interview.

Archibald expects the trend will continue until there is another U.S. stimulus bill as floated again Thursday by Democrats, quarterly earnings reports and finality to the November election.

“There’s lots of things out there that I think are keeping people awake at night. We’ve had a good bounce off the low and now we’re kind of going through our first real more choppy period here.”

September and October are seasonally not great months before an election. There’s uncertainty about the outcome this year with Joe Biden leading in most polls and U.S. President Donald Trump talking about contesting the result, possibly all the way to the Supreme Court.

“None of those things (is) going to inspire any level of confidence for people taking risk in the marketplace,” Archibald said.

The S&P/TSX composite index closed up 95.15 points to 15,912.26 after hitting an intraday low of 15,724.95.

In New York, the markets moved up from a weak start and fell into the red in afternoon before closing slightly higher on the day.

The Dow Jones industrial average gained 52.31 points at 26,815.44. The S&P 500 index was up 9.67 points at 3,246.59, while the Nasdaq composite rose 39.28 points to 10,672.27.

Initial U.S. jobless claims rose to 870,000 last week and were higher than expected while continuing claims fell a little but were also higher than expected.

“That continues to call into question the strength of the recovery,” said Archibald.

“Is it stalling out a little bit here? It’s probably part of the reason why the market has been a little bit weak in September.”

A recent rise in COVID-19 infections also adds to the uncertainty about whether some industries will again shut down and economies will slide despite the rosy timeline the White House has put out for a vaccine.

The Canadian dollar traded for 74.77 cents US compared with 74.86 cents US on Wednesday.

Materials and energy led the TSX with nine of the 11 major sectors gaining on the day.

The sector, which includes miners and forestry companies, rose 2.6 per cent despite weaker metals prices as shares of Kinross Gold Corp. surged 7.2 per cent.

The December gold contract was down US$5.60 at US$1,862.80 an ounce and the December copper contract was down nearly six cents at US$2.94 a pound.

Energy was up 1.4 per cent with Cenovus Energy Inc. up 3.7 per cent.

The November crude contract was down 14 cents at US$39.79 per barrel and the November natural gas contract was up three cents at US$2.83 per mmBTU.

Health care and technology were lower as shares of cannabis producer Aphria Inc lost 5.2 per cent.

Meanwhile, Archibald said corporate insiders have been selling their shares to take some profits in the last couple of weeks after aggressively buying them at the market bottom.

There were more than US$1 billion in sales on the S&P 500 last week, more than double the previous week.

The sales don’t necessarily suggest a market downturn is in the offing, but it calls into question the near-term outlooks of the affected companies.

This report by The Canadian Press was first published Sept. 24, 2020.

Companies in this story: (TSX:K, TSX:CVE, TSX:APHA, TSX:GSPTSE, TSX:CADUSD