TSX rises as Middle East blast drives commodities higher, markets catch up after holiday

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TORONTO — Toronto’s main stock index closed higher on Tuesday as commodities rose on fears of a potential conflict in the Middle East and Canadian markets caught up to their U.S. peers after Monday’s civic holiday break.

A massive explosion rocked Beirut on Tuesday, flattening much of the port, damaging buildings across the capital and sending a giant mushroom cloud into the sky.

Lebanon’s health minister said more than 60 people were killed and more than 3,000 injured in the huge explosion for which no immediate cause was known.

In Toronto, the S&P/TSX Composite Index closed Tuesday up 198.83 points at 16,368.03.

“What caused this explosion is still unclear, but it really shook up a number of commodities,” said Mike Archibald, vice president and portfolio manager at AGF Investments Inc.

He pointed out that gold had traded lower but rallied, with the December gold contract closing at US$34.70 to a record high of US$2,021.00 an ounce.

Similarly, oil prices fell early, but the September West Texas Intermediate crude contract closed at US$41.70 a barrel, up 69 US cents.

In response to rising gold prices, B2Gold Corp. rose 3.12% to $9.57, Kinross Gold Corp. rose 3.04% to $12.88 and Barrick Gold Corp. jumped 2.58% to $39.71.

Meanwhile, oil sands producer Suncor Energy Inc. rose 1.8% to $21.45 and pipeline company Enbridge Inc. strengthened 2.52% to $43.95.

“The market is reacting like it’s some kind of planned explosion and that’s really what’s driving the action in some of the sectors that are gaining today,” Archibald said.

“Energy names are having a very good day here, and then gold names also continue to soar on the back of rising commodities.”

Six of the 11 sectors in the Toronto market were positive on the day, led by energy, health care and telecommunications.

The biggest losers were industrialists and utilities.

Health care surged after a major sell-off in marijuana stocks last Friday, Archibald said, as investors also showed interest in defensive investments in telecommunications and some utilities.

The industries were dragged lower by weakness in Canadian National Railway Company, down $1.02 to $129.82, and Canadian Pacific Railway Ltd., down 6.76 $ to $361.61.

The two rallied on Friday on unconfirmed reports that two private equity firms were planning to buy the Kansas City Southern Railroad in the United States, but fell on Tuesday due to a lack of news, a declared Archibald.

Meanwhile, a slide in shares of Alimentation Couche-Tard Inc. helped drag the commodities sector down when it emerged that its bid for Marathon Petroleum Corp.’s gas station business. had lost to the private equity owner of 7-Eleven.

Couche-Tard shares fell 32 cents or 0.69% to $46.23.

The Canadian dollar was trading at 74.78 US against 74.60 on Friday.

The September copper contract fell 1.75 cents to just over US$2.89 a pound.

Markets were listless south of the border as negotiations continued on a new stimulus package to help the economy recover from lockdowns related to the COVID-19 pandemic.

“We haven’t seen any real progress on the file yet, so I think that’s part of the reason US markets are stalling here until we get some more clarity,” he said. declared Archibald.

In New York, the Dow Jones industrial average rose 164.07 points to 26,828.47.

The S&P 500 index rose 11.90 points to 3,306.51, and the Nasdaq composite rose 38.37 points to a record high of 10,941.17.

— By Dan Healing in Calgary

This report from The Canadian Press was first published on August 4, 2020.

Companies in this story: (TSX:ATD.B, TSX:SU, TSX:ENB, TSX:CP, TSX:CNR, TSX:BTO, TSX:K, TSX:ABX)

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