The S&P/TSX composite index was up by 32 points to 20,008 around midday. It first topped the 20,000 point level on Tuesday before losing ground in the afternoon, but Canada’s main stock index is back in the green Wednesday on renewed optimism
The rally was broad based, as financial firms, manufacturers, tech companies and the energy sector were almost uniformly higher.
A takeover battle in Canada’s pipeline industry added to the buying momentum, as Pembina Pipeline Corp. and Brookfield Infrastructure Partners are vying to buy Inter Pipeline in a three-way battle currently valuing the target firm at more than $8 billion.
At 20,000, the TSX has now gained more than 78 per cent from the low of 11,228 it closed at on March 23, 2020.
Shares in oil companies were up as the price of oil hit its highest point since October 2018, with a barrel of the North American crude benchmark known as West Texas Intermediate changing hands at more than $68 US a barrel.
Oil is higher on expectations that the world economy is slowly starting up again after the doldrums of the COVID-19 pandemic. If economies expand, they need more energy, which pushes up the price of oil.
Oil was higher despite the oil cartel known as OPEC announcing on Tuesday it would be releasing more barrels into the market — 2.1 million more barrels a day, to be exact, starting next month.
But the price rose because those barrels will easily be absorbed. “Demand growth is outpacing supply gains even with the agreed month-by-month OPEC+ production increases taken into account,” Ann-Louise Hittle, an oil strategist at energy research firm Wood MacKenzie said.
Edward Moya, a strategist at foreign exchange firm Oanda, said “oil prices seemed destined to continue to climb higher.”
Canadian energy stocks including Suncor, Crescent Point, Baytex and Canadian Natural Resources were all higher on oil’s surge
The Canadian dollar was similarly buoyed by oil’s strength, with the loonie changing hands at more than 83 cents US, a level it has see-sawed above and below this month. Prior to May, the loonie hadn’t topped 83 cents US since 2015.