TSX recap: Broad-based gains narrowly offset losses in energy and materials
Canada's benchmark stock index closed in positive territory Monday as falling crude oil prices weighed on the energy sector.
At 4:05 p.m. EDT, the S&P/TSX Composite Index gained 0.79 points, to 20,180.60.
The TSX energy and materials subgroups were the most influential downside contributors, with all other subgroups gaining.
Canadian Natural Resources Ltd., Nutrien Ltd. and Enbridge Inc. were among the stocks removing the most points off the index.
TAKING ADVANTAGE OF LOWER OIL PRICES
Benchmark West Texas Intermediate crude price fell 3.49 per cent to US$88.88 per barrel.
This comes as traders weigh concerns about Iran possibly boosting its oil supply, and China reporting that its economic slowdown deepened in July.
Ira Epstein, the director of Ira Epstein Division of Linn and Associates, said in an interview Monday afternoon that China’s annual growth target of 5.5 per cent is not achievable.
“I for one have been right out there now for one year now saying they’re lying on their numbers when they say they can hit five per cent growth. Now we see that’s not even close to being a target for them any longer and you’re seeing the impact, be it the copper [or] the oil,” Epstein said.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said this is a good time to start investing in energy-related stocks since the dip in crude oil prices won’t last.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, joins BNN Bloomberg and discusses his economic outlook amid slowing economic growth. Wren says investors will need to remain defensive. He likes the tech, health care and energy sectors.
“We think the selloff that we've seen there is more temporary and that supplies are going to continue to be tight and that's not going to change,” Wren said in an interview Monday.
“We know there's a slowdown coming in the market, to some extent, at least in our opinion, has priced that in, but here in this US$85 to US$90 area that gets us interested in oil and just energy overall.”
Liz Miller, president at Summit Place Financial Advisors, said investors should also take advantage of lower oil prices by buying companies in the cruise line industry.
Liz Miller, president at Summit Place Financial Advisors, joins BNN Bloomberg and discusses her market outlook as China's economic data drags stocks . Miller says that even as markets struggle, the latest inflation data out of the U.S. and lower oil prices suggest the bottom of this cycle could be near. She likes names like Carnival and Paypal.
“There's a lot of demand for this service, but just as demand was picking up post-COVID, of course they've got slammed with higher oil prices,” Miller said in an interview Monday.
“Fuel is just an incredible part of the margins for the cruise line industry, so if we can get some relief on energy costs, with the advanced bookings that we're seeing, we see some nice upside here.”
HOME CAPITAL SNUBS SUITOR
Shares of Home Capital Group Inc. rose 9.87 per cent to $31.28 a share after the company announced it is turning down an unsolicited, non-binding buyout approach from a third party.
The alternative mortgage lender said the unidentified suitor’s deal was all-cash and at a price that exceeded the $28.60-per-share cap on its substantial issuer bid.
In a note to clients Monday, National Bank of Canada analyst Jaeme Gloyn speculated Fairstone Bank of Canada, Onex Corp. and Brookfield Asset Management Inc. could be potential bidders for Home Capital.
Gloyn added he believes “the shares will reflect a ‘takeover premium’ in the near-term.”
Markets in New York climbed Monday. The S&P 500 rose 0.45 per cent, the Dow Jones Industrial Average gained 0.45 per cent and the Nasdaq climbed 0.62 per cent.
The Canadian dollar traded at 77.48 cents U.S., down 0.96 per cent.
