TORONTO – The Toronto stock market closed higher Tuesday as oil settled at its highest point this year, pushing energy stocks up with it.
The S&P/TSX composite index recovered from an early morning dip to close at 15,104.74, up 30.61 points, while the loonie gained 0.81 of a U.S. cent to 80.59 cents US.
In New York, stock markets closed lower as record-high auto sales figures for May suggested that the U.S. Federal Reserve may soon hike interest rates.
The Dow Jones industrial average lost 28.43 points to 18,011.94, the Nasdaq index fell 6.41 points to 5,076.52, and the S&P 500 declined 2.13 points to 2,109.60.
On the commodity markets, the July crude contract was up $1.06 at US$61.26 a barrel and the August gold contract rose $5.70 to US$1,194.40 an ounce.
The energy sector of the TSX advanced roughly one per cent, while the metals and mining sector advanced 3.4 per cent.
Sadiq Adatia, chief investment officer at Sun Life Global Investments, says despite the recent rally in oil prices, he expects crude to decline to around the $50 a barrel mark over the next few months, before it climbs back up to $60 or $70.
“People thought that supply has come down more than it has, because you’ve seen rig counts come down,” Adatia said.
“But the truth is, supply really hasn’t diminished a whole lot. Later this month OPEC will come out and highlight that they haven’t cut supply either, and when people see that disappointing news I think you’ll see some pressure on oil prices.”
Uncertainty over the fate of debt-ridden Greece has caused volatility on the stock markets lately.
On Tuesday, news emerged that the country’s creditors have come to a consensus regarding the terms of a proposed deal that will be put to Greece’s government.
“They’re nowhere closer to getting it resolved and Greece is still going to have an issue coming up with its debt payments, but at least they are working together,” Adatia said.
In economic news, U.S. factory orders data slipped 0.4 per cent in April, falling shy of expectations. That marks the eighth time in nine months that orders for goods produced in U.S. factories has declined.
Americans snapped up 17.79 million vehicles in May, up from 16.5 million the previous month.
For many investors, good economic news in the U.S. is an indication that an interest rate increase from the Fed could be imminent.
Traders are looking forward to U.S. labour market data from payroll company ADP on Wednesday and the jobs report on Friday.
“I think it’s going to be a good news story,” Adatia said. “If you think about the job picture in Canada that’ll probably be a little different. I think you’ll start to see negativity coming through, as you continue to see the fall-through of low oil prices.”