Toronto Stock Exchange regains post-Brexit losses, Canadian dollar up

TORONTO – The Toronto Stock Exchange emerged from its long weekend slumber in an upbeat mood Monday, rising by nearly 1.4 per cent as it more than recouped the losses it incurred following Britain’s vote last month to leave the European Union.

The S&P/TSX composite index was up 194.33 points at 14,258.87 after being closed Friday for Canada Day.

It had previously lost nearly 450 points, dropping more than three per cent, over the two days following Britain’s referendum results before climbing back.

The TSX is on “a continued push higher as markets are becoming more comfortable with the Brexit announcement,” said Kash Pashootan, senior vice-president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.

At the end of last week, American stock markets experienced a similar surge, he said.

In the United States, the stock markets were closed Monday for Independence Day. But they ended last week up three per cent, which came close to regaining the ground they lost following the so-called Brexit vote.

That type of market reaction has happened in the past following other big events such as the Sept. 11 attacks, he said.

“We view these as buying opportunities if you have cash on the sidelines,” Pashootan said, though he added that despite the rebound, the markets aren’t out of the woods yet when it comes to Brexit.

“It’s simply too early for the markets to start to price in a doomsday scenario.”

Pashootan said more clarity will come in two or three years when details of the union’s divorce are established.

The Canadian dollar was at 77.78 cents US, up 0.36 of a cent from Thursday’s close of 77.42 cents US.

The loonie’s strength is tied to higher oil prices and the U.S. Federal Reserve’s more dovish tone recently on the prospect of raising interest rates, Pashootan said.

Around 4 p.m. ET, the August crude contract was at US$48.76 per barrel, down 23 cents from Friday’s close.

Despite the decline, Pashootan said he thinks oil prices already bottomed out several months ago when it was trading in the US$26 range in February.

“Certainly that’s good news for the TSX,” he said of the index, which is heavily weighted in oil.

Elsewhere in commodities, August natural gas was down 7.9 cents US at US$2.908 per mmBTU, the August gold contract was at US$1,353.50 an ounce, up US$14.50, and September copper contracts were nearly unchanged at US$2.22 a pound.

— With files from the Associated Press

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