Canadian stocks are now up 600 points in 3 days, after losing nearly 700 points in the previous four; WFII Commodity Upgrade from Neutral to Favorable


Canada’s main stock market, the Toronto Stock Exchange, took its total gains over the past three days to nearly 600 points, with the heavy resources index supported by rising commodity prices of late. Nonetheless, the nearly 700 points lost in the first four days of last week have yet to all be recovered, and the TSX remains below the 19,000 level amid continued uncertainty and concerns in America. North regarding high inflation, the pace and size of future interest rate hikes speak in some quarters of a possible recession.

Among commodities today, gold prices edged higher as the price of the metal continues to drift despite the moderation in the dollar and volatility in equity markets. Gold for August delivery closed up $0.50 at US$1,710.70 an ounce.

Additionally, West Texas Intermediate crude oil rose even as supplies from Libya are expected to return to the international market while a major Canadian export pipeline to the United States declared force majeure after damage. at one of its facilities. WTI crude for August delivery closed up $1.62 at US$104.22 a barrel, Marketwatch reported, in tight trading a day before the contract expired. September Brent crude, the global benchmark, was last seen up $1.12 at US$107.39, while Western Canada Select was up $1.75 at US$80.47 the barrel.

In keeping with that positive tone, the Wells Fargo Investment Institute in an “alert” on Tuesday said it was moving commodities from neutral to supportive.

Although WFII made no changes to the forecasts, it did make changes to the allocations. “We are moving to a tactical overweight in commodities, and we favor a reallocation of US large-cap equities to fund this overweight. Importantly, we maintain our most favorable weighting in US large-cap equities and prefer to use this opportunity to lighten positions only somewhat to reallocate to commodities, where we see significant upside price potential over 12 months.”

This comes just a day after John Gibson of BMO Capital Markets expressed his optimistic sentiment on the outlook, especially for commodities. With second-quarter 2022 results expected to begin this week, BMO on Monday provided an update and adjusted estimates and target prices for its Canadian Oil Services Hedging Group. BMO believes recent weakness in stock performance creates a “compelling opportunity” for investors to enter the space. He said pricing appears to have made a “significant shift” in the quarter, and that, combined with high utilization levels, is driving a strong profit torque. But, he added, investors should be prepared for continued volatility.


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