Canadian stocks surged to a record high on Wednesday, driven by soaring cannabis stocks and a rebound in the energy sector.
The S&P/TSX Composite Index rose 0.64 per cent, or 104.42 points to 16,420.95, passing the intraday and closing high on Jan. 4. After a bout of volatility that sent global markets plunging in February, it took nearly six months for Canadian stocks to claw their way back to levels last seen at the beginning of the year. The S&P 500 Index is still trading about 3.6 per cent below its Jan. 26 high.
“It’s odd, we had the Canadian economy accelerating through about mid-2017 and the TSX was fading and lagging the U.S., and now the economy’s really coming off the boil and the TSX is back at a record high,” said Robert Kavcic, senior economist at BMO Capital Markets.
Pot stocks jumped after Canada’s upper house voted to approve the legalization of recreational marijuana, putting the country on track to see the drug sold in stores some time after September.
Canopy Growth Corp., the nation’s largest marijuana producer with a market value of $8.9-billion , soared as much as 6 per cent to $45.10, a record high. Aurora Cannabis Inc. rallied 4.7 per cent, Cronos Group Inc. gained 5.6 per cent and Aphria Inc. rose 4.2 percent.
Rising 1.4 per cent on Wednesday, energy stocks, which account for about 19 per cent of the index, have gained 11 per cent since the beginning of the second quarter, making them one of the primary drivers of recent gains. The smaller health-care and technology sectors have done even better, posting gains of 22 per cent and 18 per cent respectively quarter-to-date.
Stocks on world markets edged higher on Wednesday, recovering from a recent sell-off on rapidly escalating China-U.S. trade tensions, while U.S. treasury yields rose after the Federal Reserve chairman said the U.S. central bank should continue with a gradual pace of interest rate increases.
Fed Chairman Jerome Powell said the pace should stay the same given that the labor market does not seem to be overly tight.
The S&P 500 edged higher along with the Nasdaq, which hit a record high as Facebook Inc and other stocks hit all-time peaks.
Boeing Co also rose after selling off on trade war worries the day before.
“There haven’t been new trade tariffs announced. Investors can focus a little more on the fundamentals,” said Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute in St. Louis.
The Dow Jones Industrial Average was down slightly, a day after it erased its year-to-date gains amid President Donald Trump’s latest tariff threats against Chinese goods.
The Dow Jones Industrial Average fell 42.41 points, or 0.17 per cent, to 24,657.8, the S&P 500 gained 4.73 points, or 0.17 per cent, to 2,767.32 and the Nasdaq Composite added 55.93 points, or 0.72 per cent, to 7,781.52.
The pan-European FTSEurofirst 300 index rose 0.31 per cent and MSCI’s gauge of stocks across the globe gained 0.34 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.7 per cent higher. Shares in Hong Kong, Seoul and mainland Chinese indexes also rose.
Helping those shares was a state radio report that China will use targeted cuts in banks’ reserve requirement ratios and other monetary policy tools to boost credit for small firms.
Mr. Powell’s comments boosted yields in the U.S. Treasury market.
Benchmark 10-year notes last fell 9/32 in price to yield 2.926 per cent, from 2.893 per cent late on Tuesday. Before Mr. Powell’s remarks, U.S. yields had been little changed.
The euro held slim losses against the dollar as European Central Bank President Mario Draghi said the factors holding back local wages are subsiding and the ECB is confident inflation in the euro zone would move toward its 2-percent goal.
The dollar index fell 0.03 per cent, with the euro down 0.03 per cent to $1.1585.
In commodities markets, copper prices eased again after an inventory rise highlighted healthy supplies, extending declines from Tuesday tied to trade war worries.
Copper lost 0.36 per cent to $6,815.50 a ton.
Oil prices were mixed, with U.S. crude futures supported by a drop in domestic inventories.
U.S. crude rose $1.15 to settle at $66.22 a barrel, Brent fell 34 cents to $74.74.
Bloomberg News and Reuters