Canada’s resource-heavy main stock index rose on Thursday, lifted by commodity shares, as oil and metal prices recovered from steep losses in the last two sessions.
At 10:10 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 239.36 points, or 1.28%, at 18,969.02.
“You’re seeing a bit of a bounce back from oversold levels,” said James Telfser, managing partner at Aventine Investment Counsel.
“Commodities are really going to struggle in an environment of growth slowing down, especially if financial conditions are also tightening.”
Recession worries have walloped equity markets globally, as central banks take aggressive measures to tamp down inflation.
Canada’s economy is headed for a recession, economists at Royal Bank of Canada wrote in a note. Nevertheless, the recession will be moderate and short-lived by historical standards and can be reversed once inflation settles, they added.
The resources sector accounts for 30% of the TSX’s market capitalization.
The energy sector climbed 3.7% as U.S. crude prices, that have been sharply hit this week, rose 5.1% in volatile trade with investors turning their focus to tight supply even as fears of a global recession persisted.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 2.6% as gold prices edged up on a softer dollar and bargain hunting, while news of possible stimulus measures in China lifted copper prices up sharply from a 20-month low hit in the previous session.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 0.6% at 18,729.66 on Wednesday, near a 15-month closing low hit on June 23, as commodity stocks weighed on the index.
Adding to concerns, Canadian economic activity expanded at its slowest pace in four months in June as prices cooled, Ivey Purchasing Managers Index (PMI) data showed.
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