S&P/TSX composite sets new highs on easing of inflation concerns and energy gains

TORONTO — Canada's main stock index continued its record run on dissipating inflation fears and further signs of a bigger economic reopening.

The S&P/TSX composite index increased 90.81 points to a record close of 18,690.00 after hitting an intraday high of 18,761.90. The market is up 7.2 per cent so far this year.

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In New York, the Dow Jones industrial average increased 464.28 points to 32,297.02. The S&P 500 index was up 23.37 points at 3,898.81, while the Nasdaq composite was lost 4.99 points to 13,068.83.

"Overall, I think (markets are) being driven by the idea that we're heading toward more likely a wider reopening over the course of this year," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

COVID-19 cases are decreasing while the rollout of vaccines is accelerating.

Stock markets are forward-looking vehicles that assess where things will be in six to nine months. Universities, schools and other parts of the economy are expected to reopen more broadly over that time horizon, he said.

Sectors like technology and telecommunications that benefit when people work from home thrived over the past year during lockdowns while anything exposed to travel or in-person activities lagged.

"And now we're starting to see that reverse a little bit where we're getting profit-taking in the stay-at-home areas and rotation back into these areas that have lagged but now have room to catch up," Cieszynski said in an interview.

Bond yields eased Wednesday but have been increasing in a sign that the economy is improving after central banks intervened last year by lowering interest rates.

Inflation remains benign despite worries that massive fiscal and monetary stimulus would move prices higher.

U.S. consumer prices increased 0.4 per cent in February, the biggest increase in six months. However, a closely watched measure called core inflation, which excludes food and energy prices, posted a much smaller 0.1 per cent gain. The rise for core inflation was also below economists' expectations.

The latest report on inflation released Wednesday, along with the Federal Reserve promising to keep interest rates low, have helped ease concerns over the recent rise in bond yields.

"There's no inflation pressures and they don't see the need to cut back on their stimulus at this time," Cieszynski said of central banks, including the Bank of Canada which kept its trendsetting rate unchanged Wednesday at 0.25 per cent.

"Perhaps the concerns about inflation have been a bit overblown at this point."

Nine of the 11 major sectors on the TSX were higher, led by energy, consumer staples and financials.

Energy increased 3.8 per cent as higher crude oil prices sent shares of Vermilion Energy Inc. up 15.1 per cent.

The April crude contract was up 43 cents at US$64.44 per barrel and the April natural gas contract was up three cents at US$2.69 per mmBTU.

Oil prices rose despite a further increase in U.S. crude oil inventories last week. Prices are up nearly 33 per cent so far in 2021.

The Canadian dollar traded for 79.13 cents US compared with 79.15 cents US on Tuesday.

Consumer staples rose on a 5.8 per cent gain in shares of Empire Co. Ltd. following the release of the grocery chain's latest quarterly results.

Financials moved up with the shares of the Bank of Montreal climbing 1.6 per cent, while the Royal Bank of Canada and Scotiabank were each up 1.4 per cent.

Industrials were helped by a 6.7 per cent increase by SNC-Lavalin Inc. and a further 4.1 per cent gain by Air Canada.

Materials moved up on higher metals prices.

The April gold contract was up US$4.90 at US$1,721.80 an ounce and the May copper contract was up 2.4 cents at US$4.03 a pound.

Health care lost 2.3 per cent as shares of Aurora Cannabis Inc. fell 4.7 per cent.

Technology was down 1.8 per cent with Shopify Inc. falling 3.7 per cent.

This report by The Canadian Press was first published March 10, 2021.

— With files from The Associated Press.

Companies in this story: (TSX:SHOP, TSX:AC, TSX:SNC, TSX:ACB, TSX:BMO, TSX:BNS, TSX:RY, TSX:VET, TSX:EMP.A, TSX:GSPTSE, TSX:CADUSD=X)

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