TSX recap: Shopify, banks help offset energy weakness
Canada’s benchmark stock index ended in positive territory Wednesday as strength in the financials and technology subgroups offset weakness in energy stocks.
The S&P/TSX Composite Index closed with a 40.61-point gain, or 0.21 per cent, to 19,545.94.
Shopify Inc., Royal Bank of Canada and Toronto-Dominion Bank added the most points to the index.
The TSX energy subgroup reversed gains in earlier trading to fall 2.30 per cent as benchmark West Texas Intermediate tumbled US$3.76 to settle at US$90.66 per barrel – the lowest level since February.
SMALL OPEC+ OUTPUT HIKE
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced one of the smallest oil output hikes in the cartel’s history despite calls from U.S. President Joe Biden for an increase in global crude production.
OPEC+ countries will boost their oil-output quota by 100,000 barrels per day in September, a much slower pace compared to recent months.
“Investors are skeptical that oil prices will trade above or at these levels for an extended period of time,” John O'Connell, the chief executive officer at Davis Rea Ltd., said in an interview Wednesday morning.
John O'Connell, CEO of Davis Rea Ltd., joins BNN Bloomberg to talk about upcoming OPEC Plus meeting and his outlook for markets. He says main question is how many companies can actually produce more oil. He says what investors might be missing is that valuation for some companies will remain relatively attractive.
However, he said investors may be missing the fact that Canadian energy companies are aggressively buying back stock.
“They're shrinking the share count, so valuations should still stay relatively attractive down the road as long as these companies remain disciplined about not increasing production at unprofitable rates,” O'Connell said.
Markets in New York also ended the day on a positive note. The S&P 500 rose 1.56 per cent, the Dow Jones Industrial Average gained 1.29 per cent and the Nasdaq closed 2.59 per cent higher.
David Barr, chief executive officer and portfolio manager of two funds that focus on small-cap companies at PenderFund Capital Management, said investors should be adding more small-cap stocks to their portfolio in this environment.
David Barr, CEO and portfolio manager at PenderFund Capital Management, joins BNN Bloomberg to discuss the market and why he is seeing value in small caps at this time. Barr says that recession fears have been baked into small cap market and that the last time they were at these attractive levels was in the 2008 financial crisis. He talks on the stocks he finds most attractive at this time including ProntoForms, Sierra Wireless and Think Research Corp.
“We've seen this setup where we now have small caps trading at valuations we haven't seen in a decade. So, you know, the last time we've been here before was in the heart of the financial crisis,” Barr said in an interview Wednesday.
“When we look at the valuation of small caps today, it's very attractive moving forward.”
Barr said he’s favouring technology companies right now, which are offering “really attractive valuations” after the sector was “so frothy a year ago.”
The Canadian dollar traded at 77.87 cents U.S., up 0.17 of a cent.
