TORONTO – United states stock markets rallied Friday to close a week of losses with big gains, propelled by a more than 12 per cent begin crude oil prices.
The March agreement for oil increased US$3.23 a barrel to US$29.44.
Toronto Stock Exchange’s S&P/TSX composite index was up 293.87 points or 2.4 percent at 12,381.24.
In Ny, the Dow Jones industrial average closed up 313.66 points at 15,973.84, as the broader S&P 500 advanced 35.7 points to 1,864.78 and the Nasdaq gained 70.67 suggests 4,337.51.
The rise in oil prices also helped the commodity-sensitive loonie, which added 0.31 of a US cent to 72.14 cents US.
Federal Reserve chairwoman Janet Yellen’s recent remarks that some global growth appears weaker than initially anticipated also boosted the loonie, said Stephen Carlin, head of equities for CIBC Asset Management. It signals the Fed might not move interest rates as soon as previously thought.
Friday’s rebound seemed to be aided by a recent easing of concerns within the liquidity measures that may appear in some European banks, specifically Germany’s Deutsche Bank, he explained.
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The bank provided to buy back a lot more than $5 billion price of its own bonds Friday in a show of monetary strength. Investors sold the bank’s stock after it reported an annual loss of 6.8 billion euros at the end of January. The slide continued after concerns arose about whether the bank might make payments on complex financial instruments due April 30.
Carlin partly attributes to strength in oil prices to recent dividend cuts by a number of energy companies, comforting investors that they are starting to better align operating costs and funds flows with the current price environment.
Carlin also pointed to rumours that OPEC is ready to go over a co-ordinated supply cut as enhancing the day’s oil rally. Earlier in February, rumours that OPEC and Russia would co-ordinate a supply cut helped fuel higher crude oil prices.
However, as affordable prices continue to place considerable stress on United states oil companies, many keep capital expenditure cuts. By the end of this season, which should lead to a better balance between supply and demand, Carlin said.
Elsewhere in commodities, the March contract for gas slipped 2.8 cents to US$1.966 per mmBtu.
However, gold bullion, that has enjoyed a big run-up in recent days amid an over-all flight to safety, saw the April contract give back $8.40 to US$1,239.40 a troy ounce.
Markets in China and Taiwan, which have been closed all week for that Lunar New Year holidays, reopen Monday. However, American markets will be closed Monday for Presidents’ Day, while the TSX is closed to see relatives Day.
