TORONTO — Canada's main stock index inched higher on Tuesday while U.S. markets dipped after strong rallies since last month's lows.
The S&P/TSX composite index closed up 21.44 points at 13,614.14 after hitting an intraday high of 14,062.71.
In New York, the Dow Jones industrial average was down 26.13 points at 22,653.86 after rising by as much as 937 points in earlier trading and more than 1,600 points on Monday.
The S&P 500 index was down 4.27 points at 2,659.41, while the Nasdaq composite was down 25.98 points at 7,887.26.
"It was a very broad-based rally yesterday and today is more like let's digest that perhaps," said Sid Mokhtari, executive director of institutional equity research at CIBC.
Markets in Canada and the United States have rallied more than 21 per cent since hitting lows on March 23 after a steep fall as investors reacted to the economic impact from the spread of COVID-19.
"The selloff that we had in March was the fastest 30 per cent drawdown in history so this bounce that is coming at least based on historical observation is not a surprise," he said in an interview.
Mokhtari said investors are being cautious and waiting for the start of corporate earnings given that historical perspectives about how companies managed through past challenges aren't all that helpful with much of the economy ground to a halt.
"I think it's important for this market to be able to pause as we go forward given that we don't have much of a guidance and given the fact that the economy has shut down over the past month," said Mokhtari.
Markets rose to start the week on hope that the growth in cases of the novel coronavirus were dropping or flattening in Europe and New York.
He said the market movement was anticipating that "maybe the bulk of the damage is behind us."
On Tuesday, the daily death toll in New York reached its highest ever level.
The Canadian dollar traded for 71.50 cents US, the highest level in about three weeks and compared with an average of 70.79 cents US on Monday.
Real estate, consumer discretionary and financials were the best sectors on the day. Industrials was pushed higher by a 14.8 per cent gain in shares of Chorus Aviation and 9.3 per cent increase for Air Canada.
Materials was the weakest performer on a drop in gold prices. It slipped 1.3 per cent with Alacer Gold Corp. and B2Gold Corp. losing 6.3 and 5.3 per cent respectively.
The June gold contract was down US$10.20 at US$1,683.70 an ounce and the May copper contract was up 5.5 cents at US$2.27 a pound.
Energy was also lower on a 9.3 per cent decrease in crude oil prices.
The May crude oil contract was down US$2.45 at US$23.63 per barrel and the May natural gas contract was up 12 cents at US$1.85 per mmBTU.
Suncor Energy Inc. fell 3.8 per cent and Baytex Energy Corp. was down 2.3 per cent.
Energy prices had risen on the expectation that a deal will be reached between Russia and OPEC to cut output by up to 15 million barrels per day.
They fell off after the meeting was delayed until Thursday. Despite the expected production cuts, there is a global glut of oil as global demand remains weak, said Mokhtari.
"As long as we don't pick up in demand, it's reasonable to say that volatility in the oil market is likely to stay here for some time.
This report by The Canadian Press was first published April 7, 2020.
Companies in this story: (TSX:SU, TSX:BTE, TSX:CHR, TSX:AC, TSX:ASR, TSX:BTO, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press