By Ketki Saxena
Investing.com – In Toronto, the S&P/TSX Composite Index closed at 21,468.8 points or up 1.33% in the day’s trading.
Canada's benchmark index followed global equities higher as a more bullish sentiment seemed to return to the market after sell-offs driven by Russia-Ukraine concerns. Sentiment appears to be more risk-on as Ukraine announced peace talks with Russia appear “more realistic”, China pledged "substantial measures" to bolster capital markets and economic growth, and as the Fed hiked interest rates 25 basis points to 0.50%.
Gains were driven by the financial sector, the biggest beneficiary of rising interest rates, which allow them to widen their interest income margins. Consumer discretionary also benefited likely from the anticipated decrease in inflation and a less aggressive hike/increase in borrowing costs than markets had priced in.
Interestingly, technology stocks also pushed higher despite the expectations for increased borrowing costs; investors may be pricing in lowered inflation and particularly the cost of wages and are also likely incentivized to buy the dip after tech’s sell-off in the past week.
Most TSX sectors closed in the green today, including global mining, industrials, and energy. The Canadian Energy Index was little changed, despite oil’s continued decline, as both supply and demand remain uncertain. The nearly 4% spike in natural gas prices today, and continued concerns of supply disruptions from Russia likely helped offset losses for Canadian energy producers.
In New York
U.S. indices also closed in the green today, with Nasdaq 100 futures up 3.74%, the Dow Jones up 1.55%, and the S&P 500 up 2.24%.
In commodities:
Energy
Oil: Despite concerns of supply disruptions from Russia, oil prices fell 1.45% today on concerns of demand from China following another lockdown, Russia’s recent newfound support of the Iran nuclear deal, the potential lifting of sanctions on Venezuelan oil, and OPEC’s consideration of a less hard-line stance in its monthly report yesterday.
Libya, a key OPEC member, also urged the oil cartel to increase output to curb soaring prices. Libya’s announcement following a similar appeal by the UAE ambassador last week.
Natural gas was up 3.94% today, on concerns of continued disruptions from Russia and Ukraine, and no viable alternative in sight as U.S. LNG energy exports to Russia reliant EU continue to be hamstrung by regulation and environmental concerns.
Metals
Gold continued to decline from near an all-time high last week, down 0.07% in the day’s trading so far. Investors are pouring money into yield-generating treasuries as the safe-haven of choice while the Russia-Ukraine conflict continues. It also appears that gold’s risk premium from the Russia-Ukraine war was largely priced in at the onset of the conflict, and investors remain uncertain about the direction of peace talks
Silver meanwhile was 0.23% higher in the day’s trading.
Nickel markets remain in disarray after the London Stock Exchange reopened trading for the metal after nearly a week’s hiatus, only to be faced with technical glitches that effectively re-halted trading. Trading had been halted previously after a major spike in the metal’s prices driven by concerns of supply from Russia, which accounts for about 10% of global nickel output.
Palladium, which Russia produces 40% of the world’s supply, continues to decline, down -0.34% after all-time highs last week as traders realize profits.
Notably, Copper, considered a benchmark for market sentiment, rose 2.61% in the day’s trading.
In Bonds and Currencies
Yields on Government of Canada’s benchmark 10-year bonds were at 2.2%, and yields on Government of Canada 5 year bonds were at 2.03%.
Yields on the U.S. 10 year treasury were at 2.16%.
The CAD/USD pair was up 0.56% today at USD 0.78 to a loonie.