TSX has best quarter in more than a decade as gold hits nine-year high

TORONTO — Canada's main stock index ended its best quarter in more than a decade as the price of gold reached its highest level since 2011.

The S&P/TSX composite index closed up 125.50 points at 15,515.22 to finish 2.1 per cent higher in June and ahead nearly 16 per cent over the last three months.

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The unprecedented gains follow a disastrous March, which still leaves the Toronto stock market about nine per cent down for the year.

"It's obviously been a tumultuous quarter to say the least," said Allan Small, senior investment adviser at HollisWealth.

"I think most people came into this quarter coming out of March afraid, nervous, feeling as though they couldn't see the light at the end of the tunnel. And I think we're leaving this quarter with a lot more optimism."

Small said he went into Tuesday's session before the Canada Day holiday skeptical about the outcome after last week's pullback as infection rates surged in several southern and western states.

Unlike initial infections, however, the latest increases haven't been accompanied by as many hospitalizations and deaths.

Stock markets have swung wildly with the impact of the COVID-19 pandemic that's caused mass lockdowns, high unemployment and extensive fiscal and monetary stimulus.

In New York, the Dow Jones industrial average was up 217.08 points at 25,812.88 as it ended its best quarter since 1987. The S&P 500 index was up 47.05 points at 3,100.29, while the Nasdaq composite was up 184.61 points at 10,083.64, a record close.

The partial market recovery has exposed a disconnect within the economy which continues to struggle as reopenings are staggered and constrained to prevent new infections.

The stock market gains came amid strong consumer confidence numbers and Congressional testimony by Federal Reserve chairman Jerome Powell.

He said the economic outlook remains uncertain with output and employment still far below their pre-pandemic levels.

"A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities," he said, adding that all levels of government need to provide relief to support the recovery for as long as needed.

Investors in the market drop have been rewarded, while those who were scared onto the sidelines have been left behind, suggested HollisWealth senior investment adviser Small.

He expects stock markets will move in fits and starts depending on virus headlines, but tread higher in the third quarter and surge into the final months of 2020.

"I think the market is looking to the end of the year, and that's why you're seeing the gains today," he said in an interview.

"(It's) kind of bringing forward a lot of what we're going to see in the fall and into the start of the winter."

The materials sector gained more than two per cent on higher gold prices to lead the TSX. Iamgold Corp. and Hudbay Minerals Inc. rose 7.8 and 7.3 per cent respectively.

The August gold contract was up US$19.30 at US$1,800.50 an ounce and the September copper contract was up 3.6 cents at nearly US$2.73 a pound.

Industrials increased nearly one percentage point even though shares of Air Canada lost another three per cent.

The heavyweight financials sector was up 0.8 per cent.

Energy was one of four major sectors to fall as Tourmaline Oil Corp. dropped 3.5 per cent and Seven Generations Energy Ltd. was down 2.6 per cent on lower crude oil prices.

The August crude contract slid back 43 cents at US$39.27 per barrel and the August natural gas contract was up 4.2 cents at US$1.75 per mmBTU.

The Canadian dollar traded for 73.38 cents US compared with 73.09 cents US on Monday.

This report by The Canadian Press was first published June 30, 2020.

Companies in this story: (TSX:AC, TSX:TOU, TSX:VII, TSX:IMG, TSX:HBM, TSX:GSPTSE, TSX:CADUSD=X)

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