TSX rises to highest level since late November on improved risk appetite

TORONTO — Canada’s main stock index rose to its highest level since late November as risk appetite improved ahead of today’s key U.S. inflation numbers.

Markets have been volatile with bond yields rising in anticipation of central banks getting more hawkish.

Even the more dovish European Central Bank has talked about raising interest rates, prompting some market observers to anticipate a high number of rate hikes in the year ahead.

But sentiment changed Wednesday after getting a bit ahead of itself, said Michael Greenberg, portfolio manager at Franklin Templeton Investment Solutions.

“Some of those sectors that were maybe battered the most in that environment like technology and just risk in general, is kind of reverting,” he said.

“So it’s sort of a little bit of pressure being released from the valve I suppose … on longer-term trends we’ve seen throughout the year.”

The S&P/TSX composite index closed up 227.01 points to 21604.19 after hitting an intraday high of 21650.79.

In New York, the Dow Jones industrial average was up 305.28 points at 35768.06. The S&P 500 index was up 65.64 points at 4587.18, while the Nasdaq composite was up 295.91 points or

2.1 per cent at 14490.37.

U.S. 10-year bond yields fell midweek after climbing just short of two per cent.

The move supported the technology sector, a large part of U.S. markets, but also Canada’s smaller tech group.

It rose 2.9 per cent with shares of Absolute Software Corp. surging

20.1 per cent, Hut 8 Mining Corp. up 6.6 per cent and Shopify Inc. 4.9 per cent higher.

All 11 major sectors on the TSX were higher with energy up 1.8 per cent on higher crude oil prices as Whitecap Resources Inc. gained 5.6 per cent and Vermilion Energy Inc. was up 4.6 per cent.

The March crude oil contract rose 30 cents at $89.66 US per barrel, and the March natural gas contract was down 23.9 cents at $4.01 US per mmBTU.

A weaker U.S. dollar also helped materials as metals prices increased.

The April gold contract was up $8.70 US at $1,836.60 US an ounce, and the March copper contract was up 14.2 cents at $4.60 US a pound.

The Canadian dollar traded for 78.86 cents US compared with 78.68 cents US on Tuesday.

Health care was the strongest sector on the day, climbing 6.8 per cent, as Canopy Growth Corp. surged 14.8 per cent after reporting a decreased loss in its latest quarter. Aurora Cannabis Inc. was up 11.1 per cent while Tilray Inc. gained 10.2 per cent.

The consumer price index for January to be released today is expected to reach a 40-year high of 7.3 per cent year over year.

Greenberg said an even higher rate could reverse Wednesday’s market gains.

“But our expectation as the year kind of progresses is for those inflation prints to remain fairly high. But we do expect a little bit of deceleration as the year progresses.”