The Toronto Stock Exchange’s benchmark Standard & Poor’s/TSX Composite Index added 214.16 points, or 1.73 percent, to close at 12,591.93 points. Six of the TSX index’s eight main sub-sectors clicked higher.
International oil prices spiked Thursday over speculations that major producers may work to cut output. U.S.
WTI for March delivery moved up 2.85 percent to settle at 33.22 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery increased 2.39 percent to close at 33.89 dollars a barrel on the London ICE Futures Exchange.
TSX’s energy stocks took a ride up 5.29 percent. Baytex Energy Corp. advanced 9.09 percent to 3.00 Canadian dollars a share, Encana Corporation increased 14.31 percent to 6.15 dollars a share, and Suncor Energy Inc. garnered 4.52 percent to 32.83 dollars a share.
On Wednesday, Ottawa unveiled long-expected changes to the regulatory review process for major natural resource projects, mandating impacts on greenhouse gas emissions be included for the first time. On Friday, the government of Alberta will announce impending changes to the royalty rates the province charges on oil and gas production.
The National Energy Board released its price outlook to 2040 on Wednesday and the most optimistic scenario forecasts a rebound in global crude to 80 U.S. dollars per barrel by 2020, eventually breaking past triple digits again to reach 105 dollars per barrel (in 2015 dollars) by 2040. Under that scenario, the NEB expects Canadian oil production to grow 56 percent to roughly 6.1 million barrels per day.
Heavyweight gainers on the TSX index also included Bank of Nova Scotia, which jumped 3.87 percent; Royal Bank of Canada, up 3.53 percent; and National Bank of Canada, with a lift of 3.43 percent. The overall financial sub-group went up 2.46 percent.
However, shares of Canada’s transportation manufacturer Bombardier were reduced to penny-stock status for the first time since 1991 as the plane and train maker continues to have trouble selling its next generation of aircraft.
Bombardier shares were trading hands down 10.10 percent at 0.89 Canadian dollar on the TSX on Thursday, a day after closing below the one-dollar level for the first time in 25 years.
If a company falls below one-dollar per share on some major exchanges it can lead to delisting. That’s bad news for a company as it means mutual funds and ETFs that track the index must sell the shares, which increases pressure against the stock and can create a feedback loop of lower prices.
Unlike other stock exchanges, TSX rules don’t have a set minimum share price but the exchange monitors the price as part of a broader set of criteria, according to TSX spokesman Mathieu Labreche.
Bombardier shares have been sliding for more than a year as the company struggles to get its next-generation CSeries jets into the air so it can book sales to customers. On Thursday, Iran’s president is set to announce that Iran Air will be buying 118 jets from Bombardier rival Airbus now that UN sanctions against the country have been lifted.
Analyst David Tyerman of Canaccord Genuity said the stock’s decline isn’t likely tied to one event but rather to disappointment over Bombardier not winning an order from United Airlines and cumulative concerns about whether the company can withstand a macroeconomic downturn. United bought Boeing jets last week.
Meanwhile, one of Canada’s big banks is downgrading its outlook for the country’s economy, forecasting growth of just 1.3 percent this year, down from an earlier estimate of 1.7 percent.
CIBC chief economist Avery Shenfeld said a major concern is global investor sentiment, which has resulted in lower stock prices, changes on the bond market and a buildup of cash in Canadian households.
The Canadian dollar was traded higher at 0.7118 U.S. dollar, compared with Tuesday’s closing rate of 0.7091 U.S. dollar. Enditem