Energy stocks boost TSX amid oil’s rise, while tech weighs on U.S. markets

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This article was published 12/09/2023 (827 days ago), so information in it may no longer be current.

TORONTO – Strength in energy stocks as the price of oil moved higher helped Canada’s main stock index post a small gain Tuesday, while U.S. stock markets moved lower, led by the Nasdaq which lost more than one per cent.

The S&P/TSX composite index closed up 40.32 points at 20,223.08.

In New York, the Dow Jones industrial average was down 17.73 points at 34,645.99. The S&P 500 index was down 25.56 points at 4,461.90, while the Nasdaq composite was down 144.28 points at 13,773.61.

The tech sector dragged on U.S. markets Tuesday, led by Oracle, which reported “disappointing” revenue and forecasts, said Anish Chopra, managing director with Portfolio Management Corp.

“Investors are just extrapolating that that’s going to apply to some other companies … or to the tech sector. So you’ve got weakness in technology as a result of the guidance coming out of Oracle,” he said.

Meanwhile, energy stocks rose as the price of oil continued its steady march towards US$90 per barrel.

“It’s certainly a positive for stock price performance for energy companies,” said Chopra.

Oil prices have been rising on a tighter supply outlook, driven by ongoing production cuts by OPEC plus. And while there have been concerns about global demand with China’s shaky economic reopening, the latest monthly report from OPEC plus predicted global demand will increase by 2.25 million barrels per day in 2024.

“They believe there will be resilient energy demands in the major economies, meaning that energy demand will be tighter than was originally anticipated,” said Chopra.

That’s good news for energy stocks, but will also put upward pressure on inflation, into which oil prices factor heavily, said Chopra.

The Bank of Canada has noted that it expects inflation to rise in the short term because of higher oil prices.

In the U.S., investors are awaiting the latest inflation print due out on Wednesday, which will help inform the U.S. Federal Reserve’s own rate decision next week, said Chopra.

The American central bank is expected to hold off on hiking, like the Bank of Canada, but what comes next will be dependent on economic data, he said.

“I think all the central banks are trying to leave the door open, just in case inflation ticks up again.”

The Canadian dollar traded for 73.75 cents UScompared with 73.63 cents US on Monday.

The October crude contract was up US$1.55 at US$88.84 per barrel and the October natural gas contract was up 14 cents at US$2.74 per mmBTU.

The December gold contract was down US$12.10 at US$1,935.10 an ounceand the December copper contract was down two cents at US$3.79 a pound.

This report by The Canadian Press was first published Sept. 12, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)