TORONTO — Canada's main stock index recovered from early losses prompted by U.S. sabre-rattling against China and an ominous warning about COVID-19.
The S&P/TSX composite index closed up 6.45 points at 14,509.66 after losing 2.2 per cent in morning trading.
In New York, the Dow Jones industrial average was up 377.37 points at 23,625.34. The S&P 500 index was up 32.50 points at 2,852.50, while the Nasdaq composite was up 80.56 points at 8,943.72.
The markets initially sank on U.S. President Donald Trump's latest musings about China, suggesting that he could bar Chinese stocks trading on U.S. exchanges unless they follow U.S. accounting rules.
It felt like Trump was "ratcheting up" some of the trade tensions that existed before the two sides reached Phase 1 of a trade deal, said Greg Taylor, chief investment officer of Purpose Investments.
"If we are starting to look at another trade war between those two superpowers, that's not what we need at this time," he said in an interview.
In addition, investors were concerned by comments Wednesday from the World Trade Organization that the novel coronavirus may never end and become endemic like HIV. That stoked fears that the economic recovery will take longer than expected.
The downbeat morning activity also followed the release of negative economic data in the U.S. and Canada.
Nearly three million U.S. workers filed for unemployment benefits late week, raising the total to 36.5 million in the two months since the pandemic prompted businesses to shut and people were ordered to stay home.
In Canada, manufacturing sales plunged 9.2 per cent in March for the largest decrease in more than 11 years.
Investors have largely been ignoring the drumbeat of negative news because everyone expects it to be quite bad, said Taylor.
"It feels like we're getting a bit of a free pass right now that everyone's expecting bad and nobody is shocked when it is bad," he said.
"The problem's going to be a month or two out when we need to see that macrodata start to improve and if that's not the case then I think that's the potential for us to retest the lows that we saw in March and potentially lower."
Markets rallied in later trading as investors questioned whether the selloffs on Tuesday and Wednesday were too aggressive, he said.
Eight of the 11 major sectors on the TSX were higher, led by materials as the gold price continued to climb nearly two per cent. The sector was helped by shares of Endeavour Mining Corp. and Semafo gaining about 7.5 per cent.
The June gold contract was up US$24.50 at US$1,740.90 an ounce and the July copper contract was unchanged at nearly US$2.35 a pound.
"Gold looks like it's in a perfect situation for the balance of the year," Taylor said, noting that it shines because of the massive monetary and fiscal stimulus.
Energy was up a little as Baytex Energy Corp. rose 5.6 per cent but Frontera Energy Corp. lost 9.4 per cent.
The July crude contract was up US$2.20 or 8.6 per cent at US$27.88 per barrel and the June natural gas contract was up 6.5 cents at US$1.68 per mmBTU.
Oil has been increasing because demand has hung in better than everyone thought and Saudi Arabia has suggested it will cut production deeper and longer than originally planned.
"Even if oil gets back to the $30 level it's still not a great environment for a lot of companies. They still need higher to make some money but it's way better than it was a few weeks ago," said Taylor.
The Canadian dollar traded for 70.97 cents US compared with an average of 71.06 cents US on Wednesday.
This report by The Canadian Press was first published May 14, 2020.
Companies in this story: (TSX:EDV, TSX:SMF, TSX:BTE, TSX:FEC, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
Note to readers: This is a corrected story. An earlier version said the Toronto Stock market decreased instead of closing up 6.45 points.