Toronto stock index gains nearly 200 points as Shopify Inc. shares strengthen

Toronto stock index gains nearly 200 points as Shopify Inc. shares strengthen

TORONTO — Canada’s main stock index gained nearly 200 points Wednesday as Shopify Inc. buoyed the tech sector with its strong quarterly results.

The S&P/TSX composite index gained 173.34 points to 16,294.66.

“Shopify is definitely the big story, the big driver of the TSX today,” said Nela Richardson, principal, investment strategy at Edward Jones.

“And, given its concentration in that sector, it’s been a big driver year to date,” she said of technology, which is “up considerably” so far this year.

The Ottawa-based tech firm reported Wednesday that it nearly doubled revenues and totalled US$36 million in profits during its second quarter.

The company’s shares closed up $92.28, or 7.05 per cent, at $1,401.23 after reaching an intraday high of $1,472.98 or just over 12.5 per cent.

It lifted the technology subindex to the day’s top performer. Shares in the sector gained, on average, 3.33 per cent of their worth. They’ve advanced 40.47 per cent so far this year.

As earnings reports continue, it’s clear plenty of are struggling due to the COVID-19 pandemic, noted Richardson.

“Q2 is expected to be the worst quarter for earnings in a long time,” she said, “(and) to see the kind of revenue and earnings picture that Shopify has exhibited outpacing the market was a strong signal for the tech sector.”

Also helping the Toronto market was news from the U.S. Federal Reserve, which announced it was keeping the benchmark interest rate near zero.

“We have held our policy interest rate near zero since mid-March and have stated that we will keep it there until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” read a transcript of the chair’s opening remarks.

That news helped the TSX, as well as markets south of the border, said Richardson.

In New York, the Dow Jones industrial average advanced 160.29 points to 26,539.57. The S&P 500 index rose 40.00 points to 3,258.44, while the Nasdaq composite increased 140.85 points to 10,542.94.

“I think what the Fed does that comforts the market is it says and reiterates, ‘We’ll do what it takes,’” she said, adding that earnings in America beating “the very low expectations so far” also helps investor sentiment.

Gold continued its streak Wednesday, as the August gold contract gained US$8.80 to US$1,953.40 an ounce.

“A lot of the gold story now is because of the weakening (U.S.) dollar,” said Richardson.

The Canadian dollar traded for 74.85 cents US compared with 74.78 cents on Tuesday.

Elsewhere in commodities, the September crude contract rose 23 cents to US$41.27 per barrel and the September natural gas contract advanced nearly seven cents to US$1.93 per mmBTU. The September copper contract was relatively unchanged at nearly US$2.92 a pound.

This report by The Canadian Press was first published July 29, 2020.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press

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