Almost half the way. On Tuesday, Canada’s main stock exchange recovered 216 points or 1.1% and headed back to the recently topped level of 20,000, supported by improving commodity prices. With this, the Toronto Stock Exchange recouped about 40% of its losses in the previous two sessions, when commodity prices were mostly lower. However, in terms of direction indications, the TSX has lost almost 20 points in the last few minutes, after appearing ready to regain 50% of its losses on Friday and Monday.
Among sectors, Info Tech gained 2.8%, and Finance and Energy rose about 0.85%.
On the topic of stocks and commodities, Wells Fargo released a report on Tuesday that examined the “real connection” between stocks and commodities.
WFII said: “Over the past year, two of the top performing major asset classes have been commodities and stocks. Some see this as a reasonable and steady connection, the idea being that stocks and materials Commodities have the most to gain as a global economy We agree that there may be an economic connection here, but it has generally only lasted a short time. In the long run, commodities and stocks have often moved in different directions. ”WFII cited a chart showing when bear markets occurred in commodities, stocks and bonds. He noted that when stocks were in a bear market, commodities often – but not always – were in a bull market.
The WFII noted that long-term investors are often drawn to commodities for this very reason; they have tended to be negatively correlated with the stock markets over the long term. In other words, he said, when the stock market zigzagged, the commodity market collapsed. As a result, commodities may have helped stabilize the value of a portfolio during bearish equity markets. “Of course, past performance is no guarantee of future results,” he added.
As to why this long-term negative connection is happening, the WFII said one of the main reasons is that raw materials are major input costs for companies, many of which trade in the stock markets. He added that when the prices of raw materials go up, it can cost more for a company to produce its own products. This can weigh on a company’s share price. On the other hand, if the prices of raw materials fall, that same company can produce its products more cheaply. This can be viewed favorably by stock market investors.
Among commodities today, gold closed with a slight gain even as the US dollar rose and bond yields rose slightly after the previous day’s sell-off in stock markets. Gold for August delivery was up $ 2.20 to US $ 1,811.40 an ounce.
And West Texas Intermediate (WTI) crude oil stabilized higher on Tuesday, a day after falling the most in 10 months as OPEC + decided to increase supplies by 400,000 barrels per month while markets plunged over concerns over the spread of the Covid-19 Delta variant. In its last day as an active contract, WTI crude for August delivery closed up $ 1.00 at US $ 67.42 per barrel, while September’s WTI closed up $ 0.85. at US $ 67.20 a barrel, Marketwatch reported. September’s Brent crude, the global benchmark, was last seen up $ 0.82 to US $ 69.44 and Western Canada Select was up $ 1.07 to US $ 53.43 per barrel.