The main Canadian stock index recouped losses from the previous day, and then some on Tuesday, as energy and tech stocks rebounded strongly after what had been a rocky start to the trading week.
The S & P / TSX Composite Index rose 386.65 points to 20,924.87, a day after restrictions tightened around the world in response to increased cases of the new Omicron variant that sparked a meltdown of the North American market.
Craig Jerusalim, portfolio manager at CIBC Asset Management, said the reason the market rallied so easily on Tuesday likely had something to do with the positive news of the day from pharmaceutical company Moderna on the effectiveness of its COVID-19 booster, as well as data from the UK and South Africa suggesting Omicron could peak quickly without the death and hospitalization rates of previous waves.
“The market sees this as a big plus point,” Jerusalim said, saying the markets likely also benefited from the end of the loss-making season on Tuesday, which may lead to a bargain hunt for oversold stocks. .
The energy sector posted big gains on Tuesday, driven by gains in the price of crude oil that were hit in the previous day’s session amid Omicron fears. Among the big winners in this sector were Vermilion Energy Inc., up 7.5 percent, and Enerplus Corp., up 6.3 percent.
The February crude contract was up $ 2.51 to US $ 71.12 per barrel and the March natural gas contract was unchanged at US $ 3.64 per mmBTU.
The February gold contract was down US $ 5.90 to US $ 1,788.70 an ounce and the March copper contract was up five cents to US $ 4.35 per pound.
Travel-related stocks – like Air Canada, which rose nearly 6% on Tuesday – also saw a good boost.
âBut by far the biggest contributor to TSX today is the big rebound we’re seeing in Shopify,â Jerusalim said, adding that there didn’t seem to be a single driver behind Shopify’s 6.5% gain. Inc. Tuesday, other than positive US online retail data and general market optimism.
“Shopify is by far the largest inventory in Canada, and when it hits average numbers within a day, it will be by far the biggest contributor in the market today.”
In New York, the Dow Jones Industrial Average was up 560.54 points or 1.6% to 35,492.70. The S&P 500 Index gained 81.21 points to 4,649.23 while the Nasdaq Composite was up 360.14 points to 15,341.09.
The Canadian dollar was trading at 77.36 US cents against 77.27 US cents on Monday.
While December was defined by high market volatility, Jerusalem pointed out that the TSX60 is up about 25 percent year over year.
âThis beats the S & P500, the Dow Jones and the Nasdaq for the year,â he said. âCanada has had one of its strongest years against the United States in a long, long time. “
Looking ahead to 2022, Jerusalem said it expects this trend to continue, given starting valuations and other factors like that country’s comparatively stronger Covid-19 response.
âI think the Canadian markets can have another good year, both in absolute terms and in relative terms against US stocks,â he said.
This report by The Canadian Press was first published on December 21, 2021.
Companies in this story: (TSX: GSPTSE, TSX: CADUSD = X)
Amanda Stephenson, The Canadian Press