Canada’s main stock index rose on Tuesday to its highest level in over three weeks as gains for financial and industrial shares offset a decline in the energy group. Wall Street ended sharply higher, lifted by Apple and Microsoft, while a jump in Treasury yields elevated bank stocks ahead of a key inflation reading this week.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 141.68 points, or 0.7%, at 21,377.18, its highest closing level since Jan. 17.
Financial shares, which account for about one-third of the Toronto market, were up 1.2%, also getting a boost from rising bond yields. Higher interest rates tend to raise the margins that banks can earn on their loans.
Bank of Canada Governor Tiff Macklem is due to speak on Wednesday on the evolution of Canadian business, which could offer clues on the interest rate outlook.
Money markets expect the Canadian central bank to begin hiking rates at its next policy announcement on March 2 and to raise borrowing costs a total of six times this year.
Industrials added 1.5%, while the materials group, which includes precious and base metals miners and fertilizer companies, ended 2.0% higher, helped by higher gold prices.
U.S. crude oil futures settled 2.2% lower at $89.36 a barrel as investors worried the resumption of indirect talks between the United States and Iran lead to more oil exports from the OPEC producer.
The slide in oil weighed on energy stocks, which ended 3.9% lower. It included a 6.4% decline in the shares of Cenovus Energy Inc after the company reported a quarterly loss.
The benchmark S&P 500 and the tech-heavy Nasdaq reversed early losses and gained in the latter part of the session, with Amazon.com Inc gaining 2.2%, and Apple and Microsoft both rising over 1%.
The S&P 500 banking index rallied 1.9% after the benchmark 10-year U.S. Treasury yield hit its highest level since November 2019, at 1.97%, on mounting expectations the U.S. Federal Reserve will start tightening monetary policy.
Shares of Bank of America Corp, JPMorgan Chase & Co and Wells Fargo all gained over 1%.
The S&P 500 energy sector index sank 2.1% as investors worried the resumption of indirect talks between the United States and Iran could revive an international nuclear agreement and allow more oil exports from the OPEC producer.
Upbeat comments from French President Emmanuel Macron about his meeting with Russian President Vladimir Putin over the Ukraine crisis also dented oil prices and reduced anxiety on Wall Street, said Scott Ladner, chief investment officer at Charlotte-based wealth management firm Horizon Investments.
“Today’s gain is probably due to some of the Macron headlines, but it’s also just recognition of the fact that the economy is in pretty good shape, and we probably overdid it a little to the downside,” Ladner said.
With Tuesday’s rise, the S&P 500 remains down about 5% so far this year, while the Nasdaq has lost about 9%.
U.S. consumer prices data, set to be released on Thursday, is forecast at a four-decade high of 7.3%. The numbers follow strong U.S. labor data last week that added to investor concerns that the Fed will tighten rates faster than thought.
Concerns around aggressive policy tightening by the U.S. central bank, geopolitical tensions in Ukraine and mixed results from Big Tech have weighed on the major U.S. indexes since the start of the year.
The Dow Jones Industrial Average rose 1.06% to end at 35,462.78 points, while the S&P 500 gained 0.84% to 4,521.52.
The Nasdaq Composite climbed 1.28% to 14,194.46.
Earnings were mixed on Tuesday, with Pfizer Inc down after the drugmaker’s full-year sales forecast for its COVID-19 vaccine and antiviral pills fell short of estimates.
Amgen Inc surged nearly 8% after the company announced a buyback of up to $6 billion and forecast earnings would more than double by 2030.
Facebook-owner Meta Platforms fell 2.1% after billionaire investor Peter Thiel decided to step down from the company’s board, driving a fourth day of losses in the stock after its bleak forecast last week wiped out billions of dollars in market value.
Peloton Interactive Inc soared 25%, despite slashing its revenue forecast as the exercise bike maker said it would replace its chief executive and cut jobs in a bid to revive sagging sales.
Coty Inc jumped 8% after the cosmetics seller raised its earnings forecast for 2022.
Advancing issues outnumbered declining ones on the NYSE by a 1.58-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favored advancers.
The S&P 500 posted 29 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 60 new highs and 108 new lows.
Volume on U.S. exchanges was 10.3 billion shares, compared with a 12.3 billion average over the last 20 trading days.
Reuters, Globe staff
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