S&P/TSX composite ends day up more than 200 points, U.S. stocks also close higher
Canada's main stock index ended the first trading day of the week up more than 200 points, as U.S. stock markets also closed higher.
The S&P/TSX composite index was up 213.89 points at 19,987.23, with gains in the energy sector helping lead a broad-based rally.
In New York, the Dow Jones industrial average was up 229.63 points at 32,381.34. The S&P 500 index was up 43.05 points at 4,110.41, while the Nasdaq composite was up 154.10 points at 12,266.41.
"I think investors have a bit more confidence that inflation is on a downward trajectory. Of course, all eyes will be on the U.S. CPI tomorrow (for the month of August) to confirm that," said Angelo Kourkafas, investment strategist at Edward Jones.
"But it seems like despite central banks, including the Bank of Canada last week, beating the hawkish drum, markets have rallied — which to us, suggests that expectations about interest rate policy have now recalibrated appropriately."
With that being said, there’s more market volatility ahead, according to Kourkafas.
"We might see markets being range-bound, but eventually start to recover as central banks become less hawkish. But it's going to take some time for this to happen," he said.
Last Wednesday, the Bank of Canada raised its interest rate by three-quarters of a percentage point to 3.25 per cent and signalled more hikes to come. The U.S. Federal Reserve could also serve up a jumbo rate hike later this month.
"Patience is likely required for investors. But there are some encouraging signs that the Bank of Canada and the economy is making some progress towards that soft-landing scenario," Kourkafas said.
He expects the markets to turn more positive in the last couple of months of the year.
It was a busy Monday in Canada’s energy sector, with Calgary-based Tamarack Valley Energy Ltd. saying that it is buying privately held Deltastream Energy Corp. for $1.425 billion, a move Tamarack believes will solidify its position as the largest producer in northern Alberta's Clearwater heavy oil play.
The stock ended the trading day up a penny at $3.99 per share and was a top mover on the S&P/TSX composite index Monday.
Meanwhile, Toronto-based Shawcor Ltd. said it is changing its name to Mattr and launching a review of strategic alternatives that could result in the sale of its pipeline and oilfield asset management divisions.
The stock closed the trading day up 22 cents at $8.06 per share.
Kourkafas is neutral on the energy sector.
"The energy sector is not a sector investors really want to own in later parts of the economic cycle, especially with heightened risks of a recession," he said.
"But there are some positive things in favour of the sector, in terms of the limited (oil) supply and the capital discipline that some of these companies have been able to maintain. And that leaves us with a neutral position for the sector."
The October crude contract was up 99 cents at US$87.78 per barrel and the October natural gas contract was up 25 cents at US$8.25 per mmBTU.
The December gold contract was up US$12 at US$1,740.60 an ounce and the December copper contract was up about four cents at US$3.61 a pound.
The Canadian dollar traded for 77.04 cents US compared with 76.72 cents US on Friday.