TSX rises on tame U.S. inflation data, crude oil hits five-month high

TORONTO — Canada's main stock index resumed its upward trajectory, setting a 2019 trading high, following tame U.S. inflation data and increased crude oil prices.

After falling Tuesday on lower economic growth forecasts by the International Monetary Fund, the TSX rose as data showed that underlying inflation remained in check even though consumer prices increased by the most in 14 months in March.

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"We're definitely seeing a relief rally on the equity front and a lot of that is on the heels of that softer inflation report this morning out of the U.S. which has essentially reinforced the cautious approach from central banks," says Candice Bangsund, portfolio manager for Fiera Capital.

The inflation data supports the Federal Reserve's decision in March to pause its interest rate hikes.

"Essentially what we're seeing in the data as of late is that the economic results have been strong enough to defy those fears of a pronounced slowdown but not strong enough to force central banks to reconsider their patient and cautious approach and this is obviously a very constructive backdrop for equity markets in general," she said in an interview.

The S&P/TSX composite index closed up 59.84 points to 16,396.29 after setting a 2019 high of 16,409.77 in earlier trading.

The index was helped by a broad-based rally, with all of its 11 major sectors rising except materials, which fell on lower copper prices.

Energy was the best performer, gaining 1.7 per cent followed by health care. Crescent Point Energy Corp. led the key energy sector, rising 6.57 per cent, with Cenovus Energy Inc. and Encana Corp. up 4.78 per cent and 4.10 per cent respectively.

The sector's performance was helped by crude oil prices rising to a new five-month high on a report that U.S. crude stockpiles rose last week to their highest level since November 2017 while gasoline inventories fell beyond expectations.

In addition, OPEC is adhering to production cuts while supply is being disrupted by sanctions on Venezuela and Iran.

The May crude contract was up 63 cents at US$64.61 per barrel and the May natural gas contract was up 0.1 of a cent at US$2.70 per mmBTU.

"That's why we're seeing the TSX outperform the U.S. today. It's largely a story about energy shares outperforming the rest of the market," added Bangsund.

The Canadian dollar traded at an average of 75.04 cents US compared with an average of 75.10 cents US on Tuesday.

The June gold contract was up US$5.60 at US$1,313.90 an ounce and the May copper contract was down 0.85 of a cent at US$2.93 a pound.

In New York, the Dow Jones industrial average was up 6.58 points at 26,157.16. The S&P 500 index was up 10.01 points at 2,888.21, while the Nasdaq composite was up 54.97 points at 7,964.24.

Companies in this story: (TSX:CPG, TSX:ECA, TSX:CVE, TSX:GSPTSE, TSX:CADUSD=X)

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