Stock markets rebound 1 day after big drop, oil rallies higher

North American stock markets and oil prices moved solidly higher Thursday, putting at least a temporary stop to the steady losses that have plagued those markets lately.

Loonie slips lower as more economists think Bank of Canada rate cut is imminent

Stock markets in Toronto and New York ended Thursday sharply higher, led by gains in the energy sector. (Frank Gunn/Canadian Press)

North American stock markets and oil prices moved solidly higher Thursday, putting at least a temporary stop to the steady losses that have plagued those markets lately.

The benchmark stock index in Toronto, the S&P/TSX composite index, ended the day with a gain of 166 points, or 1.4 per cent, at 12,336, led by a 3.9 per cent rise in energy stocks.   

Even with Thursday's triple-digit gain, the Toronto index has fallen by 5.6 per cent since the start of the year.  

In New York, the market staged an equally impressive rebound. The Dow Jones industrial average surged 228 points, or 1.4 per cent, to 16,433, led by gains in ExxonMobil and Chevron shares. The broader S&P 500 index jumped 1.7 per cent to 1,922. it was the best one-day gain for both indexes since Dec. 4.

Major U.S. indexes fell to 3½-month lows on Wednesday.

"It's been pretty ugly so far, year-to-date, and it's good to see the gains, but we'll see if they follow through tomorrow," said Sean Lynch, co-head of global equity for Wells Fargo Investment Institute.
The Canadian dollar is being pressured by low commodity prices and the diverging interest rate policies of Canada and the United States. (David Donnelly/CBC)

The loonie closed at 69.63 cents US, down 0.08 cents from Wednesday's close. Earlier in the day, it had traded as low as 69.46 cents US.

The dollar moved lower despite a rebound for oil, which gained 72 cents a barrel to settle at $31.20 US in New York trading. Oil has been testing 12-year lows this week. Benchmark Brent crude also rose. 

Rate cut bandwagon growing

Fourteen of 27 economists Bloomberg surveyed are now predicting that the Bank of Canada will cut its key lending rate by another quarter of a percentage point — to 0.25 per cent — at its Jan. 20 meeting.

Economists at CIBC and BMO on Thursday became the latest to join the rate-cut camp.

"The commodity sector's pain is spreading to the domestically-focused, non-resource parts of the economy, trumping the gains in non-commodity exports to the U.S.," BMO said in a morning research note.

Bloomberg says trading in overnight money markets shows investors are putting the odds of a rate cut at about 50 per cent. The odds were 16 per cent a month ago.

With files from The Associated Press

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.