TSX surges on higher commodity prices
The Toronto stock market surged more than 200 points Tuesday and commodity prices registered solid gains amid hopes that central banks will take action to keep the fragile global economic recovery on track.
The S&P/TSX composite index closed with a gain of 252.19 points at 11,848.75.
The Canadian dollar rose 0.55 of a cent to 98.77 cents US.
In New York, the gains were more modest amid a shortened session. Markets were open for a half-day Tuesday and closed Wednesday for the U.S. Independence Day holiday.
The Dow Jones industrials closed with a gain of 72.43 points at 12,943.82, the Nasdaq composite index gained 24.85 to 2,976.08 and the S&P 500 index was up 8.51 points to 1,374.02.
Some analysts expect the European Central Bank to cut lending rates and the Bank of England to boost money in circulation at meetings later this week. There are also hopes that Japan and China will announce new stimulus measures.
Rising expectations for central bank help come at a time of heightened concerns that the U.S. economy could be stalling after the Institute for Supply Management said Monday that U.S. manufacturing shrank in June for the first time in almost three years.
“The previously pace-setting factory sector has obviously stumbled, bumped by global economic headwinds (the euro crisis being the epicentre) and more cautious domestic spending,” said BMO Capital Markets senior economist Michael Gregory.
The Toronto stock market finished last week with a strong advance after Europe’s leaders appeared to have finally come up with plans that show they are serious about restoring confidence in the eurozone.
Among other things, the plan allows European bailout funds to pump money directly into troubled European banks, rather than make loans to governments to bail out the banks. The move rescues the banks without putting strapped countries deeper in debt.
Traders also closely watched the impact of tighter sanctions starting July 1 by the U.S. and Europe against Iran over the country’s nuclear program. Iran, OPEC’s second-biggest producer, is finding fewer countries willing to buy its crude, which could pinch global supplies.
The August crude contract on the New York Mercantile Exchange surged $3.91 to $87.66 US a barrel. Copper futures jumped seven cents to $3.54 US a pound. Bullion gained $24.10 to $1,621.80 US an ounce.
European markets were positive with London’s FTSE 100 index closing with a gain of 0.83 per cent, Frankfurt’s DAX advancing 1.26 per cent and the Paris CAC 40 up .96 per cent.
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