Canada’s main stock index rose on Wednesday morning as oil prices jumped nearly 3 per cent on Wednesday.
At 11:15 a.m. ET, the S&P/TSX composite index was up 22.52 points, or 0.14 per cent, to 16,302.61.
Energy stocks jumped 2 per cent, led by a 5.2-per-cent jump from Seven Generations Energy Ltd. Husky Energy Inc., Vermilion Energy Inc. and Cenovus Energy Inc. all rose 2.2 per cent.
Marijuana producers led a 2-per-cent drop in health care stocks. Canopy Growth Corp. was down 2.8 per cent, while Aurora Cannabis Inc. fell 3.7 per cent.
Corus Entertainment declined 12.2 per cent to an all-time low after reporting lower-than-expected third-quarter revenue.
The United States’ friendlier stance on its trade relationship with China led global stock markets slightly higher on Wednesday, despite a 2-per-cent slide in Chinese equities, and drew the U.S. dollar towards its second straight day of gains.
U.S. President Donald Trump’s administration unveiled a plan for a stronger security review process of foreign investors acquiring American technologies, softening its tone from previous remarks indicating it would specifically block Chinese investments.
“Such legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump said in a statement.
The Dow Jones Industrial Average rose 185.82 points, or 0.77 per cent, to 24,468.93, the S&P 500 gained 13.14 points, or 0.48 per cent, to 2,736.2 and the Nasdaq Composite added 12.14 points, or 0.16 per cent, to 7,573.76.
Gains were capped by investors’ persistent concerns about the volatility in U.S.-China trade rhetoric.
“Investors are trying to decide what the policy is going to be with respect to trade with China and the rest of the world. It vacillates between their feeling pessimistic about it and some sense of encouragement that it won’t be as severe as feared,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
The pan-European FTSEurofirst 300 index rose 0.90 per cent and MSCI’s gauge of stocks across the globe gained 0.10 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.24 per cent lower, while Japan’s Nikkei lost 0.31 per cent.
Losses were led by China, where Shenzen-listed blue chips sank 2.1 per cent to a whisker above 13-month lows. Chinese equities have now fallen into so-called bear market territory, having tumbled 20 percent from recent peaks.
“After a lot of saber-rattling, we are seeing Shanghai suffering a lot more than Wall Street, so clearly the first round (of trade war) has been won by America. Unfortunately, that then overflows into emerging markets and Europe,” said Peter Lowman, chief investment officer at UK wealth manager Investment Quorum.
Political concerns in Europe are also worrying investors at the margin as a fight over migration policy in Germany’s coalition government rumbles on, raising concerns that the euro zone’s biggest economy could be headed for snap elections.
That also contributed to pushing euro zone yields lower , with German yields edging toward one-month lows.
Trump’s latest plans to screen foreign investments led some safe-haven investments lower.
The U.S. dollar, however, rose broadly, including against the Swiss franc and Japanese yen, on the U.S. new plan on foreign investments.
The dollar was up 0.28 per cent against the yen at 110.36 yen, and it advanced 0.47 per cent against the franc.
The dollar index, which measures the greenback against a basket of six currencies, was up 0.44 per cent at 95.075, on pace for its second straight day of gains.
Gold prices slipped to a six-month as the dollar strengthened, making bullion more expensive for buyers using other currencies.
The move takes gold’s losses this month to more than 3 per cent - the biggest monthly loss since September - driven by a dollar rally, a large decline in gold held by exchange traded funds and a sharp fall in speculative bets on higher prices.
Spot gold dropped 0.3 per cent to $1,255.27 an ounce. U.S. gold futures fell 0.25 per cent to $1,256.80 an ounce.
U.S. Treasuries gave back some price gains after Trump’s statement, but yields continued lower on the uncertainty.
Oil rose as plunging U.S. crude stockpiles compounded supply concerns due to uncertainty over Libyan exports, a production disruption in Canada, and U.S. demands that importers stop buying Iranian crude from November.
U.S. crude stocks fell by nearly 10 million barrels last week, the most since Sept. 2016, while gasoline and distillate inventories rose less than expected, the Energy Information Administration said.
U.S. crude futures rose $1.74 to $72.27 a barrel, after hitting a session high of $72.61 a barrel. Brent crude rose $1.51 to $77.82 a barrel.
The spread between the two narrowed as the EIA said U.S. crude exports soared to a record 3 million barrels per day.
Crude stocks at the Cushing, Oklahoma, delivery hub for the NYMEX futures contract fell by 2.7 million barrels, EIA said.
“Cushing is a whopper,” said Bob Yawger, director of energy futures at Mizuho, referring to the drawdown.
The report reflects only one single day of a Syncrude production disruption in Canada, where output feeds into pipelines that go to Cushing. Production at Syncrude’s oil sands facility was offline at least through July, after a power outage last week locked in 350,000 bpd.
“Next week, you’re going to have a Cushing storage number that includes seven days of the Syncude outage. The math there would imply would imply that you’d get an even bigger draw than this week,” Yawger said.
The fall in Canadian exports has helped drain supplies of heavy crude across North America and contributed to a major draw in U.S. crude oil inventories, analysts said.
Also keeping markets on edge was the risk of a disruption to supplies from Africa and the Middle East.
In Libya, a power struggle between the internationally recognized government and rebels has left it unclear who will handle the country’s oil exports.
The future of Iranian crude exports is also unclear. The United States has told all countries to stop importing Iranian oil from November, as the Trump administration ramps up pressure on the Islamic Republic.
Trying to make up for disrupted supply, the Organization of the Petroleum Exporting Countries said last week it would increase output.
Saudi Arabia plans to pump a record 11 million bpd in July, up from 10.8 million bpd in June, an industry source familiar with Saudi plans told Reuters on Tuesday.
Despite widespread international opposition to the U.S. stance on Iran, analysts expect a significant reduction in exports from OPEC’s third biggest producer, perhaps in excess of 1 million bpd.
Iran pumped 3.8 million bpd in May, Reuters’ monthly survey showed.
Goldman Sachs said the planned unilateral U.S. sanctions against Iran would likely have a “high level of efficiency.”
Risk consultancy Eurasia Group said it was “very unlikely” the United States would succeed in ending Iranian oil sales as fast as it hoped.
But it said: “We are increasing our estimate of oil likely to come off the market by November to about 700,000 bpd — another bullish factor for prices.”
Reuters