TSX posts another solid gain and loonie advances as metal prices climb

TORONTO – The Toronto stock market and the loonie both rose for a second consecutive session Thursday as metal prices continued to trend higher in the face of a weakening U.S. dollar.

The S&P/TSX composite index climbed 181.48 points to 12,774.50, its second triple-digit increase in as many days.

The Canadian dollar was also higher for a second day, up 0.14 of a U.S. cent at 72.75 cents US after having soared 1.32 cents Wednesday in its biggest one-day gain in almost four years.

In New York, the Dow Jones industrial average rose 79.92 points to 16,416.58, while the broader S&P 500 gained 2.92 points to 1,915.45 and the Nasdaq closed 5.32 points higher at 4,509.56.

In commodities, the April gold bullion contract rose $16.20 to US$1,157.50 a troy ounce, while the March copper contract added four cents to US$2.13 a pound.

Meanwhile the March oil contract, which enjoyed a big run-up of $2.40 a barrel Wednesday, gave back 56 cents to US$31.72, while March natural gas fell seven cents to US$1.97 per mmBtu.

Andrew Pyle, senior adviser and portfolio manager at Scotia Wealth Management, said the markets are beginning to stabilize following a tumultuous start to the year.

“Investors are looking at some of the more recent declines as perhaps being overdone in the context of what the fundamentals are, so we’re seeing a little bit more positive sentiment,” said Pyle.

Some of the strength in commodity prices in recent days can be attributed to declines in the greenback, said Pyle.

Commodities are priced in U.S. dollars, so any weakness in the value of the greenback makes commodities such as metals and oil more affordable to holders of other currencies.

“During the last few years, when the U.S. dollar has been very strong, it’s been extremely difficult for commodity prices to do better, even if their fundamentals were OK,” said Pyle.

The U.S. dollar has weakened recently against many other major currencies amid indications of a slowdown in the American economy and growing expectations that the U.S. Federal Reserve will decide against further interest rate increases later this year.

There was some more bad news on the U.S. economic front Thursday as the U.S. Commerce Department reported factory orders fell 2.9 per cent in December. It was the fourth such contraction in the last five months and closed out a year in which demand for American manufactured goods retreated for the first time in six years.

Meanwhile, the Labor Department reported that U.S. productivity fell three per cent in the fourth quarter, the biggest such quarterly decline in nearly two years.

—With files from Brian McKenna

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