Canada's benchmark stock index finished strongly again Wednesday after investors brushed off U.S. equity declines to focus on a jump in the price of light crude and other commodities.
"Canadian markets have been benefiting from improvement in general equity sentiment and commodity price gains," said Colin Cieszynski, a market analyst at CMC Markets Canada.
Oil rose $1.94 to $62.04 U.S. a barrel on the New York Mercantile Exchange, pushing up Toronto stocks, particularly energy and mining firms, and the Canadian dollar.
Since Feb. 18, light crude has risen by 46 per cent. The S&P/TSX composite index has risen 35 per cent since the equity market rally began on March 9, while the loonie has added 14 per cent, or 11 cents U.S..
The S&P/TSX composite index rose 131.49 to 10,232.44, while the S&P/TSX Venture exchange jumped 9.15 to 1,085.64. The loonie surged 1.21 cents U.S. to close at 87.69 cents U.S.. Gold rose $10.70 to $937.40 U.S. an ounce.
Cieszynski said buying momentum accelerated following the release of the weekly U.S. Department of Energy oil inventories, which showed demand for oil and gasoline picked up last week. Oil inventories fell by 2.1 million barrels compared with expectations for a 400,000 drop, while gasoline inventories declined by 4.3 million barrels amid expectations for a 1.2 million drop.
"This may be viewed as particularly significant with U.S. summer driving season set to kick off this weekend," he said, noting the Memorial Day holiday is on Monday.
Cieszynski said gains in other commodities, including copper, natural gas, wheat and corn, suggested investors could be starting to anticipate an improvement in the demand for resources.
"Precious metals have also been picking up (Wednesday) despite gains in equities and commodities," he said. "This suggests that short term fear capital may have already rotated back out into other market areas. It also indicates that investors may now be focusing on the long-term implications of bailouts and stimulus on inflation."
Among the best performers on the TSX were Agnico-Eagle Mines Ltd., which rose 3.180 points, or 5.2 per cent, to $64.76, and Goldcorp Inc., which gained 2.49 points, or 6.3 per cent, at $42.14.
Meanwhile, U.S. stocks see-sawed Wednesday to end the day lower after U.S. Federal Reserve minutes revealed concerns of a deeper recession. Adding to the drag on sentiment were new lending restrictions that could crimp credit card company profits.
The S&P 500 index dropped 4.66 points to 903.47, while the Dow Jones industrial average fell 52.81 points to 8,422.04. The Nasdaq ended down 6.70 at 1,727.84.
