North American markets surge for third straight session as oil prices climb

TORONTO – Rising oil and other commodity prices helped push the Toronto stock market higher Wednesday for the third straight day as investors warmed to signs of an improving economy on the horizon.

The S&P/TSX composite index advanced 312.18 points at 12,867.16, more than making up the ground lost in a string of downturns last week.

The resource-heavy market benefited greatly from positive sentiment across all sectors, especially from metals and mining stocks, which jumped more than 13 per cent. Shares in First Quantum Minerals was the highest gainer in the sector, rising by more than 25 per cent.

“We’re starting to see a recovery and today is one of the first days that people are starting to actually believe in this recovery,” said Colin Cieszynski, chief market strategist at CMC Markets Canada.

The TSX was also boosted from a surge in Bombardier (TSX:BBD.B) shares, which shot up 19 cents or 21.1 per cent to close at $1.09. The embattled plane and train builder announced it was shedding 7,000 jobs worldwide, but also said it has a letter of intent from Air Canada (TSX:AC) for a sale of up to 75 of its new CSeries passenger jets.

The Montreal-based company, which reports in U.S. currency, had a net loss of US$5.34 billion for 2015, including a US$677 million loss in the fourth quarter.

“Normally missing on earnings, lowering sales guidance and laying off people is usually not very good for your stock price,” said Cieszynski.

“So we could be pretty certain that (rise in stock) is being driven by the Air Canada deal. We’re still trying to debate whether it’s a shot in the arm or too little too late, but it’s certainly an improvement and every little bit helps at this point for them.”

The Canadian dollar soared, up 0.93 of a U.S. cent to 72.97 cents US, on higher copper prices. March copper gained two cents to US$2.08 a pound.

In New York, major indexes were also up strongly for a third consecutive day, with the Dow Jones industrial average adding 257.42 points or 1.59 per cent to 16,453.83. The broader S&P 500 climbed 31.24 points or 1.65 per cent to 1,926.82, while the Nasdaq composite index was 98.10 points or 2.21 per cent higher at 4,534.06.

On commodity markets, the March crude contract for benchmark U.S. oil added $1.62 to close at US$30.66 a barrel following a conditional plan by four influential oil producers — Qatar, Saudi Arabia, Russia and Venezuela —to freeze output levels as part of an effort to put a bottom on falling oil prices. Iran has yet to agree to the deal.

“(Investors) are encouraged that at least they’re talking to each other,” said Cieszynski, adding that the markets will likely remain optimistic even if Iran refuses to agree.

In other commodities, March natural gas was up four cents at US$1.94 per mmbtu, while April gold added $3.20 to finish the day at US$1,211.40 an ounce.

Besides the resurgence in oil, traders also took heart from the latest report from the U.S. Federal Reserve, which said U.S. factory output rose 0.5 per cent in January, the biggest increase since July, after contracting for four consecutive months.

In its latest minutes released Wednesday, the Fed expressed concerns over volatile stock markets, dropping oil prices and slowing growth in China and overseas.

The minutes from last month’s meeting also showed that the Fed will likely only hike interest rates again if the economic data supports it. The central bank raised rates for the first time in nearly a decade last December.

Follow @LindaNguyenTO on Twitter.