Toronto stock market rally led by cannabis while U.S. stock markets closed

Toronto stock market rally led by cannabis while U.S. stock markets closed

TORONTO — Canada’s main stock index posted a triple-digit advance to start the trading week on a broad-based rally led by a resurgence among cannabis stocks.

“Even though they don’t make up as big a part of the market as they used to, they’re having a real surge today,” said Michael Currie, vice-president and investment adviser at TD Wealth.

The health-care sector led the TSX by climbing five per cent. Hexo Corp. soared nearly 24 per cent while larger companies Canopy Growth Corp. and Aphria Inc. were up 8.5 and 4.9 per cent respectively.

Cannabis stocks have done well over the last two weeks after March sales numbers were higher.

“It was obviously a very beaten down sector so a lot of these stocks are still well, well off their highs but we’ve seen a really strong recovery just in the last two weeks and seems to be continuing today,” Currie said in an interview.

The S&P/TSX composite index closed up 161.78 points at 15,089.08.

U.S. stock markets was closed for the Memorial Day holiday. However, stock markets were up in Europe and Japan.

Eight of the 11 major sectors on the TSX were higher.

Materials and energy were the exceptions while consumer staples was unchanged.

Materials fell slightly on lower gold prices.

The June gold contract was down US$8.10 at US$1,735.50 an ounce and the July copper contract was up 2.15 cents at nearly US$2.41 a pound.

Energy was lower despite higher crude oil prices as Vermilion Energy Inc. lost 3.5 per cent on the departure of its CEO.

The July crude contract was up 47 cents at US$33.72 per barrel and the July natural gas contract was down 2.5 cents at nearly US$1.86 per mmBTU.

“The supply is still pretty strong, but demand is increasing as areas of the world that we expected to be shut down a lot longer seem to be opening up a little quicker,” said Currie.

The real estate sector increased 2.8 per cent led by Brookfield Property Partners LP up seven per cent.

Commercials property owners got a boost from the was economic reopenings following two months of COVID-19 pandemic lockdowns.

There’s a lot of optimism on the reopenings even though shopping malls aren’t on the list yet, said Currie.

Technology was higher with a series of companies gaining, including Shopify Inc.

Financials also got a boost a day before the start of quarterly results with National Bank up more than three per cent.

The banking sector isn’t expected to face a tough earnings’ season with high credit provisions, said Currie.

“Some people were just thinking maybe they’ve been beat up a little too hard. They’re optimistic that the credit losses won’t be as bad as people are predicting.”

This report by The Canadian Press was first published May 25, 2020.

Companies in this story: (TSX:NA, TSX:BPY.UN, TSX:HEXO, TSX:WEED, TSX:APHA, TSX:SHOP, TSX:VET, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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