TORONTO — A rise in energy stocks helped lift Canada’s main stock index Monday, while U.S. stock markets ended the trading day mixed, as investors gear up for a big week of earnings and an interest rate decision from the U.S. Federal Reserve.
The S&P/TSX composite index closed up 121.56 points at 19,104.48.
“The move of the TSX is really the bounce back in the energy sector. Energy stocks got absolutely hammered in June and early July and now they’re clawing that back a little bit,” said John Zechner, founder and chairman of J. Zechner Associates, in an interview.
Zechner says his firm was back buying energy stocks last week after lightening up in the weeks prior, adding that the sector is “still a safe spot.”
“The cash flow, the stocks are incredibly cheap, they’re spinning off a ton of money,” he explained. “And then there’s this new religion they’ve got of giving (that money) back to the shareholders through share buybacks or paying down debt, as opposed to the old game of just growing for the sake of growth.”
Cenovus Energy Inc., TC Energy Corp., Imperial Oil Ltd., Enbridge Inc., Precision Drilling Corp., Arc Resources Ltd., and MEG Energy Corp. are all scheduled to reporting their quarterly results later this week.
In New York, the Dow Jones industrial average was up 90.75 points at 31,990.04. The S&P 500 index was up 5.21 points at 3,966.84, while the technology-heavy Nasdaq composite was down 51.45 points at 11,782.67.
A mid-week announcement from the U.S. Federal Reserve will be top of mind for investors, with the central bank expected to deliver another three-quarter percentage point interest rate hike.
“The Bank of Canada probably gave the Fed cover for a point move if they wanted to. But the consensus is still (75 basis points). So anything other than 75 will surprise the market,” Zechner said. “A full percentage point would be almost panicky at this point. I’d be surprised if they moved a full percentage point.”
Second-quarter GDP data in the U.S. will also provide some economic insight at the end of the week on the question of a recession, and whether or not the country is headed into one.
Big tech will take centre stage this week after disappointing revenue from Snap Inc. and an uninspiring report from Twitter Inc. last week raised questions about the future of mobile and online advertising.
There’s been a wave of layoffs across the sector as companies tighten their belts amid some slowdown in demand, rising labour costs and an overall assessment of cost structures. Zechner calls it a “make or break” week for the sector.
Google parent Alphabet Inc., Apple Inc., Facebook parent Meta Platforms Inc. and Microsoft Corp. are all set to report their latest quarterly results this week.
Investors will also be watching what Shopify has to say when it reports on Wednesday, as the company continues to deal with the effects of a struggling stock price.
The Canadian dollar traded for 77.81 cents US compared with 77.66 cents US on Friday.
The September crude contract was up US$2.00 at US$96.70 per barrel and the September natural gas contract was up 38 cents at US$8.57.
The August gold contract was down US$8.30 at $1,719.10 an ounce and the September copper contract was up one cent at US$3.35 a pound.
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