TORONTO — Canada's stock market started the week by moving to within a couple points of its record close with support from the technology and energy sectors.
U.S. markets were also higher after what one analyst described as last week's "rather benign" activity.
"I chalk this up to the markets further processing the factors that have been driving a lot of the volatility so far this year, being high inflation, rising interest rates and geopolitical tensions," said Craig Fehr, investment strategist at Edward Jones.
"The further we moved along, the more time the market has had to digest these factors and I think that's partly what's producing this period of sideways moves, which isn't necessarily a bad thing, particularly given the sizable swings that we saw earlier this year."
Fehr said there's also a bit of a wait-and-see attitude given last week's strong U.S. labour market data, an employment report Friday in Canada and the pending release of meeting minutes from the Federal Reserve.
Those minutes from the central bank's last meeting will be scoured for clues about the Fed's next move.
While most expect interest rates to be increased by half a per cent at the next meetings of both the Fed and the Bank of Canada to address hot inflation, there's some uncertainty about how the Fed is going to reduce its balance sheet.
"Monetary policy, particularly the pace of rate hikes from both the Fed and the Bank of Canada and really global central banks at large, are really going to be the governing factor on the markets for the balance of this year," Fehr said in an interview.
The S&P/TSX composite index ended the day up 132.65 points to 22,085.60, the highest close since last Tuesday's 22,087.22.
In New York, the Dow Jones industrial average gained 103.61 points at 34,921.88. The S&P 500 index was up 36.78 points at 4,582.64, while the Nasdaq composite was up 271.05 points at 14,532.55.
Seven of the 11 major sectors on the TSX were higher, led by energy, technology and health care.
Energy gained 1.5 per cent on higher crude oil prices as shares of Headwater Exploration Inc. increased 5.3 per cent.
The May crude contract was up US$4.01 at US$103.28 per barrel and the May natural gas contract was up down 0.8 of a cent at US$5.71 per mmBTU.
The increase was a rebound from last week's sharp selloff, rather than a result of any headline news, said Fehr.
"The markets are really focused on what the long-term global and supply dynamics look like. So I think that's probably going to keep some element of volatility in crude oil prices as we proceed."
The Canadian dollar traded for 80.06 cents US compared with 79.92 cents US on Friday.
Technology climbed 3.1 per cent during its own rebound as there's been a pause in a sharp jump in bond rates that have been punitive for growth investments. The sector was the most beaten down, especially during the market correction in February and early March.
"We're seeing some of the recent underperformers become outperformers, and I'd say that's probably what's helping tech somewhat today as well," Fehr added.
Shares of Shopify Inc. increased 4.9 per cent while Lightspeed Commerce Inc. was 4.7 per cent higher.
Optimism toward the sector was also buttressed by the disclosure that Tesla CEO Elon Musk is Twitter's largest shareholder with a nine per cent stake in the social media platform, Fehr said.
Materials was one of four laggards on the day despite higher metals prices.
The June gold contract was up US$10.30 at US$1,934.00 an ounce and the May copper contract was up 9.3 cents at US$4.78 a pound.
Fehr anticipates volatility will resume as markets continue to digest inflation data through the lens of how aggressive central banks are going to be.
"I think the fundamentals probably suggest we still have more upside for equity markets. I just think the path is going to be pretty choppy over the course of the year."
This report by The Canadian Press was first published April 4, 2022.
Companies in this story: (TSX:HWX, TSX:LSPD, TSX:SHOP, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
