Canada’s main stock index edged higher on Wednesday, helped by gains for heavily-weighted energy shares and Enbridge Inc after the company said it would sell natural gas assets.
The Toronto Stock Exchange’s S&P/TSX composite index rose 0.26 per cent, or 41.56 points, to 16,304.72.
Nine of the index’s 10 main groups gained. Still, the index traded in a narrow range with U.S. markets closed for the Independence Day holiday.
Energy shares rose 0.6 per cent.
Shares of Enbridge rose 1 per cent to $46.84. The company would sell its western Canadian natural gas gathering and processing business to Brookfield Infrastructure Partners LP and its institutional partners for an enterprise value of about C$4.31 billion, the companies said.
Kinder Morgan Canada Ltd said in a filing on Tuesday it is restarting construction in August on the Trans Mountain pipeline’s expansion after halting work in the spring due to opposition from environmentalists and other groups as Canada prepares to buy the project in a bid to boost country’s oil exports.
The company’s shares dipped 0.5 per cent to $15.81.
Health care stocks rose 1.1 per cent, led by a 2.5-per-cent increase in Valeant Pharmaceuticals International Inc. Aphria Inc. jumped 1.6 per cent, while Canopy Growth Corp. increased 0.7 per cent.
The Canadian dollar steadied against its U.S. counterpart on Wednesday while holding near its strongest level in nearly three weeks, as oil prices rose and investors braced for a potential interest rate hike next week from the Bank of Canada.
The Canadian dollar was trading nearly unchanged at $1.3142 to the greenback, or 76.09 U.S. cents.
The price of oil, one of Canada’s major exports, was driven higher by a threat to supply from an Iranian commander and a drop in U.S. crude inventories for a second week in a row.
“Right now we have many problems on the oil supply side ... and we may see high prices for a few more months,” said Hendrix Vachon, senior economist at Desjardins.
The higher price of oil and an expectation in the market that the Bank of Canada will raise interest rates next week have boosted the loonie, Vachon said.
European shares traded flat on Wednesday as worries over global trade persisted, with sentiment towards semiconductor stocks in particular souring after Micron Technology was banned from selling chips in China.
The pan-European STOXX 600 index closed flat with Germany’s exporter-heavy DAX and the UK’s FTSE 100 falling both 0.3 per cent.
Trading has been choppy before a July 6 deadline when the United States is set to impose tariffs on $34-billion worth of goods from China.
The tit-for-tat saga has hit market sentiment in recent weeks. News a Chinese court temporarily banned Micron Technology from selling chips in China, the world’s biggest memory chip market, hit semiconductor stocks.
“The biggest risks to the technology sector are regulation and global semiconductor disruption from an escalating trade war,” Peter Garnry, head of equity strategy at Saxo Bank, said.
Europe’s tech sector fell 1.4 per cent, the worst sectoral performance. Chipmaker STMicro was down 3 per cent and Infineon 1.8 per cent. Silicon wafer-maker Siltronic dropped 7 per cent.
Brent oil rose on Wednesday, driven higher by a threat from an Iranian commander and a drop in U.S. crude inventories for the second week in a row.
The price rose above $78 a barrel after an Iranian Revolutionary Guards commander said he was ready to prevent regional crude exports if Iranian oil sales were banned by the United States.
The most-active Brent futures contract for September delivery settled up 48 cents at $78.24 per barrel. U.S. crude futures were up 19 cents at $74.33 a barrel, within sight of Tuesday’s 3-1/2-year high above $75 a barrel. The U.S. market will not have a settlement price due to the U.S. Independence Day holiday.
Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighboring states if Washington continued to press all countries to stop buying Iranian oil.
Looming U.S. sanctions on Iranian crude exports, force majeure in Libya and unplanned pipeline outages in Nigeria have been clouding the supply outlook despite rising output by the Organization of the Petroleum Exporting Countries.
“In an ideal world an increase in global or regional oil production would have downward pressure on prices. These are, however, no normal times as supply outages are almost weekly occurrences,” PVM Oil Associates strategist Tamas Varga said.
“Under these circumstances it is justified to argue for higher prices when production increases are announced,” he said.
Crude inventories fell by 4.5 million barrels in the week to June 29 to 416.9 million, compared with analysts’ expectations for a decrease of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.6 million barrels, API said. Crude stockpiles at oil storage facilities in Cushing have dropped after an outage at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta.
Reuters