TORONTO - The Toronto stock market snapped a vicious, four-session losing run Thursday with a solid triple-digit advance as bargain hunters moved into depressed stocks, particularly those in the energy sector.
The S&P/TSX composite index jumped 183.09 points to 14,052.97 after losing 800 points or 5.5 per cent just since last Wednesday.
The Toronto market's energy sector was a major target of buyers, rising over three per cent as the November crude oil contract in New York erased early losses to rise 92 cents to US$82.70 a barrel. The energy group had plunged 20 per cent over the past month with crude prices diving 13 per cent as a faltering global economy dampened demand prospects and hurt prices for oil and metals.
"With the level of downside that we saw, there just has to be opportunities in the market and so I think we're seeing some of that," said Paul Taylor, chief investment officer, asset allocation, BMO Global Asset Management Canada.
"That’s investors trying to get ahead of things and say, look, this has probably been overdone."
The Canadian dollar was also off the lows of the day, up 0.07 of a cent to 88.9 cents US. The currency had been sharply lower earlier as traders continued to buy into the U.S. dollar. The loonie had also been hurt by data showing that manufacturing sales fell 3.3 per cent in August to $52.1 billion. Economists had expected a drop of 1.6 per cent.
The sharp sell-off seen on American markets this month also largely took a break amid a strong read on U.S. manufacturing output. The Federal Reserve says output at manufacturing plants rose 0.5 per cent in September after declining 0.5 per cent in August. Total industrial production surged one per cent last month, as output from mines and utilities both increased.
The Dow Jones industrials fell 24.5 points to 16,117.24, the Nasdaq was up 2.07 points to 4,217.39 and the S&P 500 index rose 0.27 of a point to 1,862.76.
Most Toronto sectors supported the market — railway stocks boosted the industrials sector 2.45 per cent. The financials sector also provided lift, up 0.6 per cent.
The base metals sector was the major decliner, down one per cent as the December copper contract dipped three cents to US$2.98 a pound.
The gold sector was also a drag, down about 0.25 per cent as December bullion took back $3.60 to US$1,241.20 an ounce.
North American markets have plunged in recent days as a retracement that started last month gained momentum on worries that Germany — Europe's biggest economy — is heading back into a recession. It's also been exacerbated by a worsening global outlook from the International Monetary Fund and a disappointing read Wednesday on U.S. retail sales in September.
The Toronto stock market has been moving deeper into correction territory and has been in danger of giving up all year-to-date gains. With Thursday's gain, the index has still lost 10.25 per cent since hitting record highs on Sept. 3 with resource sectors absorbing most of the damage. The base metals components has also fallen about 22 per cent in the past month and the other major TSX pillar, the financials group, has fallen close to nine per cent.
U.S. markets have so far avoided formally falling into correction, defined as a drop of 10 per cent from recent highs, but that could change soon.
Losses Thursday left the Dow down almost seven per cent since Sept. 19 while the S&P 500 has fallen almost eight per cent. Both indexes had been at or close to record levels and a correction has been widely expected since there hadn't been a retracement in three years.