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Toronto market gives up early gains as oil price rise boosts energy stock prices

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    TORONTO — Canada’s main stock index gave up early triple-digit gains on Tuesday as energy remained the sector with strong gains by the end of the trading day.

    The S&P/TSX composite index closed down 20.70 points at 16,162.96, despite an 8.92 per cent rise in energy.

    Benchmark U.S. West Texas Intermediate oil rose by US$1.00 per barrel to US$41.92 as investors welcomed news that European leaders have agreed on a budget and coronavirus relief fund worth more than C$2.7 trillion.

    "In Canada, it’s certainly a strong day in energy. The price of oil is up quite a bit," said Anish Chopra, managing director with Portfolio Management Corp.

    "There’s just more stimulus coming into the economy, right? So when you have the deal in Europe, it supports the demand side of the supply-demand balance. And oil is a global commodity."

    Economy watchers were also buoyed by a Statistics Canada report showing retail sales in Canada rebounded sharply in May and June, all but wiping out the deep declines of the COVID-19 lockdowns.

    Sales surged 18.7 per cent in May, a sharp reversal from the record 26.7 per cent nosedive in April — the lowest point in the COVID-19 crisis, when efforts to contain the pandemic had forced mass closures throughout the sector.

    StatsCan also released a preliminary estimate that sales jumped an additional 24.5 per cent in June.

    In Toronto, Canadian Natural Resources Ltd. gained 10.5 per cent to $25.53 and fellow major oil producer Suncor Energy Inc., which reports second-quarter results Wednesday, was up 8.1 per cent to $24.48.

    The Canadian dollar, which often mirrors oil prices, traded for 74.37 cents US compared with 73.84 cents US on Monday.

    The financial sector eked out a 0.45 per cent gain led by the Royal Bank of Canada’s 0.8 per cent price rise.

    The materials sector rose 0.7 per cent on continued strength in gold prices. The August gold contract was up US$26.50 to US$1,843.90 an ounce, marking another nine-year high.

    Iamgold Corp. was up 21 cents to $6.43 after the company announced it will go ahead with its US$1.3-billion Cote Gold mine in northern Ontario. Construction of the project, which is 30 per cent owned by Sumitomo Metal Mining Co., is to start this summer and it is to open in the second half of 2023.

    The sector that lost the most on Tuesday was technology — down 2.83 per cent after a strong day Monday. The drop was led by Shopify Inc. with a 6.4 per cent fall to $1,280.80.

    South of the border, U.S. markets rose on strength in traditional sectors that outpaced weakness in technology stocks, although a late day stumble erased much of the gain.

    Hope for more economic aid from the government, following Europe’s example, helped put investors in a buying mood Tuesday, said Kristina Hooper, chief global market strategist for Invesco.

    "The U.S. does not have the safety net that Europe has," she said. "This is an environment in which there is going to be a need for more fiscal stimulus or you could see real hit to consumers."

    In New York, the Dow Jones industrial average was up 159.53 points at 26,840.40, while the S&P 500 index was up 5.46 points at 3,257.30. Meanwhile, the Nasdaq composite was down 86.73 points at 10,680.36 on technology stock weakness.

    Elsewhere in commodities, the August natural gas contract was up 3.4 cents at US$1.68 per mmBTU on Tuesday. The September copper contract was up 4.25 cents at nearly US$2.96 a pound.

    With files from The Associated Press

    This report by The Canadian Press was first published July 21, 2020.

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