TORONTO — A summer heat wave continued to push natural gas prices higher and propelled Canada's main stock index further along the path to registering its sixth straight month of gains.
The energy sector rose with large Canadian natural gas players Tourmaline Oil Corp. and Arc Resources Ltd. having a good day as their shares rose 4.4 and 3.7 per cent, respectively.
Demand has increased for gas that's used for cooling houses, something that's typical this time of year, although temperatures have soared beyond normal in western provinces.
"Obviously we've seen some record temperatures in various parts of the country in the last couple of days, and that's clearly driving part of the move in the natural gas space," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
The August natural gas contract was up 3.7 cents at US$3.63 per mmBTU while the August crude contract was up seven cents at US$72.98 per barrel.
Both natural gas and crude oil prices were up sharply before pulling back toward closing.
Overall, the S&P/TSX composite index closed up 25.77 points to 20,171.02 in the second quietest day of trading in June. It hit an intraday high of 20,214.35 that's about 81 points off the record high set a couple of weeks ago.
The market is poised for another monthly gain to end the second quarter on Wednesday. With one day left in June, the TSX is up 7.9 per cent in the quarter and 15.7 per cent year-to-date.
In New York, the Dow Jones industrial average was up 9.02 points at 34,292.29. The S&P 500 index was up 1.19 points at 4,291.80, while the Nasdaq composite was up 27.83 points at 14,528.34, with both setting record highs.
The Dow inched higher with several banks raising their dividends after passing the Federal Reserve stress test. The biggest beneficiary was Morgan Stanley, whose shares climbed 3.3 per cent after doubling its payout.
Canadian banks are likely to make similar moves after the domestic regulator, the Office of the Superintendent of Financial Institutions (OSFI), relaxes the rules around capital restrictions, likely in the fall.
Also bolstering market sentiment was U.S. consumer confidence data that was the strongest since the pandemic began.
"Clearly consumers are taking a fairly upbeat view of the broader U.S. economy," Archibald said in an interview.
That strengthened the U.S. dollar and caused the loonie to weaken.
The Canadian dollar traded for 80.75 cents US compared with 81.07 cents US on Monday.
"So the movement up in the U.S. dollar is obviously causing some pretty significant weakness across the board in commodityland. Gold and silver are both getting hit fairly sharply alongside copper, and so it's got the material space down pretty aggressively here in Canada."
The August gold contract was down US$17.10 at US$1,763.60 an ounce and the September copper contract was down 1.4 cents at US$4.26 a pound.
Industrials was up as shares of Air Canada increased 1.5 per cent despite concerns about if the Delta variant will affect travel. Telecommunications was helped by a 6.6 per cent boost in shares of Corus Entertainment Inc. after it posted strong quarterly results.
Investors are waiting for Friday's U.S. jobs report for June that is expected to be healthy and bodes well for corporate profits with second-quarter results starting in a couple of weeks, said Archibald.
He said there's pent-up interest in bringing workers back.
While it's difficult to forecast the near-term, Archibald expects some increased volatility for markets during the summer but they remain in good positions over the medium-term.
However, there's also a chance for a modest pullback that would be healthy.
"It wouldn't surprise me to see a little bit more volatility into the summer season. But after that, I think you probably have a pretty strong back half of the year."
This report by The Canadian Press was first published June 29, 2021.
Companies in this story: (TSX:AC, TSX:CJR.B, TSX:ARX, TSX:TOU, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press