Stock markets rally to hopes for Omicron variant as crude oil prices rise

Canada’s main stock index surged as assurances of the latest variant of COVID-19 propelled the energy sector higher and sparked a widespread rally.

The S & P / TSX Composite Index closed 227.83 points higher at 20,861.10.

In New York, the Dow Jones Industrial Average was up 646.95 points or 1.9% to 35,227.03. The S&P 500 Index was up 53.24 points to 4,591.67, while the Nasdaq Composite was up 139.68 points to 15,225.15.

The gains, which followed last week’s sell-off, were largely driven by reassuring comments about the Omicron variant, said Angelo Kourkafas, investment strategist at Edward Jones.

He specifically pointed the finger at White House medical adviser Dr Anthony Fauci, saying that the data shows hospitals are not overwhelmed by the latest wave of COVID cases in South Africa and that reports suggest that cases of the variant are relatively mild.

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“It’s going to take a little longer to figure out what the impact of the Omicron variant is, but so far I think it’s the positive comment that came out on Sunday night that brings some relief,” a- he said in an interview.

Nonetheless, Kourkafas said volatility remains high as there are still many unknowns about the variant.

The S&P 500 has risen or fallen more than one percent in six of the past trading sessions, including Monday.

“It’s clear that the headlines are moving stock prices today, but if we look below the surface what we’re seeing is that stocks related to the economic reopening are outperforming today.”

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US airlines, travel-related stocks are up while tech stocks have continued to underperform.

Air Canada shares rose 3.3 percent to help industrials, while a 4.9 percent gain in crude oil prices pushed the energy sector up 2.6 percent .

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The January crude oil contract rose US $ 3.23 to US $ 69.49 per barrel and the January natural gas contract fell 47.5 cents to nearly US $ 3.66 per mmBTU .

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The shares of Crescent Point Energy Corp. jumped 7.9 percent after the Calgary-based company raised its quarterly dividend and raised its production forecast for next year.

READ MORE: Alberta projects $ 5.8 billion smaller deficit amid rising energy prices: second quarter budget update

The Canadian dollar was trading at 78.25 US cents from 78.05 US cents on Friday.

All 11 major sectors of the TSX were up, with nine increasing by at least one percent. Consumer discretionary rose 2.2%, while health care rose 1.9%.

Materials rose 1.1 percent due to high copper prices.

However, gold prices have fallen as the yield on 10-year bonds increases, and upcoming central bank meetings will likely outline plans to hike interest rates in 2022.

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The February gold contract was down US $ 4.40 to US $ 1,779.50 an ounce and the March copper contract was up 7.1 cents to nearly $ 4.34 US per pound.

The Bank of Canada is expected to announce on Wednesday that it expects rates to start rising in the first quarter due to improving labor markets and inflation topping three percent for seven months. It would be sooner than he previously reported.

Kourkafas says expectations call for five rate hikes over the next 12 months, which he calls aggressive.

In the United States, the Federal Reserve could double the pace of bond reduction and raise interest rates until mid-2022.

“Right now the market is anticipating, we’re going to see between two and three rate hikes from the Fed next year.”

Technology was one of the weakest industries in the United States. It gained 1.5% in Canada, shares of Dye & Durham Ltd. soaring 9.3% as it announced a deal to buy Telus’ financial solutions business for $ 500 million.

© 2021 The Canadian Press

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Felix J. Dixon