Toronto market jumps by most since January on relief rally

FILE PHOTO: A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch/File Photo

February 25, 2022

By Fergal Smith

TORONTO (Reuters) – Canada’s main stock index on Friday notched its biggest gain in nearly four weeks as investors looked past Russia-Ukraine uncertainty amid optimism that an energy crisis could be averted.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 344.07 points, or 1.66%, at 21,106.00, its biggest gain since Jan. 31. For the week, the index rose 0.47%.

U.S. stocks also ended higher, posting a second day of sharp gains, as investors welcomed coordinated Western sanctions on Russia that targeted its banks but left its energy sector largely untouched.

Investors worry that an energy crisis could derail global economic recovery.

“We are seeing a relief rally as oil prices have returned to where they were before this week, before the conflict escalated,” said Angelo Kourkafas, investment strategist at Edward Jones.

“Historically, the stock market has had a long history of being able to look through these geopolitical uncertainties.”

U.S. crude oil futures settled 1.3% lower at $91.59 a barrel, after notching a seven-year high during Thursday’s session at $100.54.

The Toronto market’s energy sector climbed 2.3% despite the pullback in oil, while heavily-weighted financials also ended 2.3% higher.

It included a 5.6% gain for Canadian Imperial Bank of Commerce (CIBC) and a 1.9% advance for National Bank of Canada after both lenders comfortably beat analysts’ estimates for quarterly earnings.

The materials group, which includes precious and base metals miners and fertilizer companies, added 1.8%.

“We continue to have a lot of uncertainty both on the geopolitical side and when it comes to inflation,” Kourkafas said. “The market recovery might not be as swift as the last two days imply.”

To fight inflation, the Bank of Canada is expected to hike interest rates next week for the first time since October 2018.

(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Marguerita Choy)

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