Strong results lift energy and materials, help lift S&P/TSX Composite Index



Strong quarterly results propelled the energy and materials sectors higher, helping Canada’s main stock index rebound from its lowest level in three months.

Energy was the top sector on Wednesday, climbing more than 3% and outpacing crude oil prices, as shares of Cenovus Energy Inc. jumped 10.3% after the Calgary producer tripled its dividend and reported first-quarter earnings of $1.6 billion.

“Cenovus definitely had a very good quarter last night and had a very good dividend increase, which I think we really expect from many energy companies as they will report in the coming weeks,” said Greg Taylor, Chef. investment officer of Purpose Investments.

The June crude contract rose 32 cents to US$102.02 per barrel and the June natural gas contract rose 36.1 cents to US$7.34 per mmBTU.

Taylor said that as long as crude remains above US$100, producers will be “cash flow machines” with management preferring to return cash to shareholders rather than making an acquisition or building new ones. projects.

Natural gas prices rose following Russia’s decision to cut off supplies to Poland and Bulgaria.

“I think natural gas is definitely outperforming because we’re starting to realize that Western Europe is going to suffer for a few years on the natural gas side as they try to find new sources of natural gas instead of Russia. ”

Taylor said it’s unfortunate that Canada doesn’t have liquefied natural gas (LNG) for export, but Canadian producers could sell more of it to the United States to offset their LNG exports to Europe. .

The Canadian dollar was trading at 77.95 cents US against 78.14 cents US on Tuesday.

Record quarterly profits for Teck Resources Ltd. pushed the company’s shares up 11.7%, helping to push the materials up despite falling gold prices.

The June gold contract was down US$15.40 at US$1,888.70 an ounce and the July copper contract was up 1.1 cents at US$4.48 a pound.

The Vancouver-based mining company said first-quarter profits soared to $1.57 billion and revenue nearly doubled to $5.03 billion as demand for its copper, zinc and iron and steel coal increased.

Five of the 11 major sectors of the S&P/TSX Composite Index were up that day. That propelled the TSX to close up 53.42 points at 20,744.23 for its first positive day in six sessions.

In New York, the Dow Jones industrial average rose 61.75 points to 33,301.93. The S&P 500 index rose 8.76 points to 4,183.96, while the Nasdaq composite fell 1.81 points to 12,488.93.

Taylor said investors would take a positive flat day for the markets as a win after the big selloff of the past few days.

“I think people are looking for more signs of relief and it’s really going to be about those earnings to see if we can get any positive signals and then we can hopefully build on that with further gains.”

The tech-heavy Nasdaq fell to a 52-week low of 12,430.90 as some positive results from Microsoft were offset by Alphabet, Google’s parent company, whose shares fell more than 3% after missed analysts’ forecasts.

Facebook reported after markets closed on Wednesday with Amazon and Apple reporting on Thursday.

Taylor said these tech stocks could set the tone for the sector.

“Maybe if we can get some good numbers out of these remaining tech companies, there might be a time to bounce back a bit more at the end of the month and maybe in May.”

The Canadian tech sector tumbled at the close, with Shopify Inc. losing 2.8%.

Taylor said the Ottawa-based e-commerce company is in a precarious position as investors are in risk aversion mode and seek value.

The heavy financial sector lagged on the day, losing ground as major banks were down, including Bank of Nova Scotia and Laurentian Bank, down 1.8% and 1.7%, respectively.

“There’s a lot of fear that with some of these big moves in bond yields and commodities you’re going to get some kind of financial crisis and that’s one thing that would hurt the banks and I think that’s causing people to just be a little more careful with their bank accounts.

This report from The Canadian Press was first published on April 27, 2022.


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