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TSX eclipses 20,000, loonie posts 6-year high as oil climbs



Toronto Stock Exchange

Canada‘s main stock market index moved above the 20,000 threshold for the first time on Tuesday, while the loonie notched a six-year high, with sentiment boosted by higher commodity prices and data showing strong growth in the domestic economy.

The Toronto Stock Exchange’s S&P/TSX composite index touched a record high at 20,022.13 before dipping to 19,976.01, up 1.2% on the day. Since hitting its low during the coronavirus crisis in March last year, the commodity-linked index has soared nearly 80%.

Twenty thousand is “a great big psychological level,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “It’s confirmation that we have a pretty solid upward trend in place.”

The TSX is up 14.6% since the beginning of 2021, outpacing Wall Street. It is expected to rise to 21,750 by the end of 2022, a Reuters poll showed last month.

Materials and energy shares account for 25% of the Toronto market’s capitalization, compared with 5% for the S&P 500. Oil touched its highest level in nearly three years at $68.87 a barrel, while the TSX’s energy sector ended up 4.4%.

The market has also been underpinned by an improved outlook for the domestic economy as COVID-19 vaccinations climb. About 58% of Canada‘s population has received at least one dose, data from the Our World in Data project at the University of Oxford shows.

Domestic data showed first-quarter economic growth of 5.6% on an annualized basis and manufacturing activity expanding for the 11th straight month in May.

The Canadian dollar, which has benefited this year from a more hawkish Bank of Canada as well as higher commodity prices, touched its strongest level since May 2015 at 1.2007 per U.S. dollar, or 83.28 U.S. cents before retreating. It was little changed on the day at 1.2070.

(Reporting by Fergal Smith; Editing by Bernadette Baum and Peter Cooney)


Canadian retail sales slide in April, May as COVID-19 shutdown bites



december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

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Canadian dollar notches a 6-day high



Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

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Toronto Stock Exchange higher at open as energy stocks gain



Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

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