TORONTO (Reuters) - Record high gold and oil prices propelled the Toronto Stock Exchange’s main index more than 90 points higher on Wednesday, as it rang in the new year with robust gains by resource shares.
The materials sector led the advance, rising 3.8 percent, while its gold subsector soared 7.5 percent as the price of gold touched a record $861.10 an ounce, helped by a weaker U.S. dollar and international political tensions.
Meanwhile, the heavyweight energy sector climbed 2.1 percent as oil briefly hit the highly anticipated $100 a barrel mark amid violence in oil-producer Nigeria and tight energy stockpiles. Crude eased to $99.62, but was still up $3.64.
“Clearly what we’re seeing is a strong rally on the commodities side, which I think has offset what we might otherwise have seen as a weak day with weaker news coming out of the U.S.,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.
The S&P/TSX composite index .GSPTSE closed up 93.70 points, or 0.68 percent, at 13,926.76 in the first trading day of the year.
Despite the sharp advance, only four of the TSX’s 10 main groups ended in positive territory.
The sharp rise came in contrast to markets south of the border, as U.S. stocks finished sharply lower on weak manufacturing data and heightened concerns about the outlook for the world’s largest economy.
Warne said that she expects oil to stabilize around $100 in the short-term, but suppliers could see a downside to high prices if the cost of producing crude climbs.
“I think the longer we see high oil prices, we’re likely also to continue to see suppliers in tight situations and therefore the cost of producing oil is likely to be increasing further,” said Warne.
The strong boost from commodity prices helped the resource-laden TSX index overcome worries about a recession south of the border, as U.S. manufacturing data pointed to signs of a contraction.
The Institute for Supply Management’s manufacturing survey index showed factory activity fell to 47.7 in December, its weakest level since April 2003.
“Any number below 50 is typically associated with recession, so we’ve heard the ‘R word’ many, many times over the course of the last couple of months,” said Neil Andrew, portfolio manager at Leeward Hedge Funds. “However, this certainly gives credence to that possibility.”
In Toronto, financial stocks led the downside, falling 1.6 percent. Bank of Montreal (BMO.TO) was off 73 Canadian cents, or 1.3 percent, at C$55.60, while Bank of Nova Scotia (BNS.TO) slid 65 Canadian cents, or 1.3 percent, to C$49.63.
The technology sector was down 0.8 percent.
Elsewhere, Quebecor World Inc IQW.TO dipped 14 Canadian cents, or 7.9 percent, to C$1.63 while the troubled commercial printer was given two weeks to get $125 million in new financing.
Market volume was 284 million shares worth C$5 billion. Advancers outpaced decliners 898 to 683. The blue chip S&P/TSX 60 index .TSE60 closed up 5.74 points, or 0.71 percent, at 814.27.
In New York, the Dow plunged more than 200 points, showing its worst-ever start to a year, as the soft manufacturing data and soaring oil prices combined to raise worries over stagflation.
The Dow Jones industrial average .DJI slumped 220.86 points, or 1.67 percent, to 13,043.96, while the Nasdaq composite index .IXIC was down 42.65 points, or 1.61 percent, at 2,609.63.
Editing by Rob Wilson