A sign board displays Toronto Stock Exchange (TSX) stock information in Toronto.Mark Blinch/Reuters
The Toronto stock market was higher Tuesday while the slide in oil prices intensified amid weak Chinese manufacturing data, while traders considered the effect of a desperate move by Russia's central bank to halt the plunge in the ruble.
The S&P/TSX composite index climbed 73.03 points to 13,778.17 as buyers bought up energy and mining stocks that have suffered the brunt of the damage during an autumn selloff that has left the TSX barely in positive territory for the year.
Traders also took in major dealmaking in the oil industry that will see Spanish energy giant Repsol pay US$8.3 billion for all the shares of Talisman Energy (TSX:TLM), or US$8 per share (C$9.33). Including assumed debt, the deal values Talisman at US$13 billion. Talisman shares rocketed 46.5 per cent to $8.75.
The Canadian dollar was ahead 0.21 of a cent to 86.02 cents US after dropping two-thirds of a U.S. cent Monday, squeezed by a greenback that strengthened ahead of Wednesday's rate announcement by the U.S. Federal Reserve and falling prices for oil and metals.
U.S. indexes were slightly lower as the Dow Jones industrials declined 23.18 points to 17,157.66, the Nasdaq lost 9.87 points to 4,595.29 and the S&P 500 index slipped 3.53 points to 1,986.1.
The January crude contract in New York fell $1.68 to US$54.23 following a drop of almost $2 on Monday but the battered energy sector, already down 28 per cent year to date, gained 2.5 per cent.
Prices have collapsed since mid-summer, down about 50 per cent amid a huge supply/demand imbalance. Demand worries helped push oil further down Tuesday after HSBC said its manufacturing Purchasing Managers Index for China slipped 0.5 points to a seven-month low of 49.5.
China's growth fell to a five-year low of 7.3 per cent last quarter.
In other news from the oilpatch, Encana (TSX:ECA) is bucking a trend that has seen several energy companies lower their capital expenditure forecasts. The Calgary-based company it is budgeting between $2.7 billion and $2.9 billion for capital spending next year, up from its 2014 estimate of between $2.5 billion and $2.6 billion this year. Encana shares gained 41 cents to $13.94.
Also focusing financial markets Tuesday was a surprise move by Russia's central bank, which hiked its key interest rate to 17 per cent from 10.5 per cent in a move to prop up the ruble, which has lost half of its value this year, in large part because of Western sanctions and plunging oil prices.
It's the central bank's biggest interest rate hike since 1998, a year when Russia defaulted on its sovereign bonds.
The ruble initially appreciated, but later declined to a fresh low of 66.81 against the greenback.
"Since the rate hike had little impact, it's clear this is a confidence crisis and interest rate hikes probably won't be able to halt the decline barring an astronomical increase," observed BMO Capital Markets senior economist Benjamin Reitzes.
"Moreover, the sharp increase in interest rates will weaken the economy even more (beyond the drop in oil prices and sanctions), also making the ruble less attractive."
Elsewhere on the TSX, the gold sector rose 2.55 per cent as a mood of risk aversion pushed February gold up $2.60 to US$1,210.30 an ounce.
The base metals sector climbed 0.3 per cent as March copper dipped five cents to US$2.83 a pound.
TSX decliners were led by tech and financial stocks.