Oil surge lifts TSX as defence stocks jump on trump’s “dream military” spending push
Canada’s equity market rode an energy and defence tailwind on Thursday, even as headline US indexes barely moved.
Canada’s S&P/TSX composite index rose 243.15 points to 32,378.64, reclaiming much of the prior day’s loss and moving back within sight of its record close, according to Reuters.
Energy led the advance, with the sector up 1.9 percent and Cenovus Energy gaining 3.4 percent.
Industrials added 1.3 percent as railroad names rebounded, while consumer discretionary and consumer staples each rose 1 percent.
Only two of the 10 major sectors ended lower, including a small dip in technology.
Oil was the key driver.
The February crude contract climbed 3.2 percent to US$57.76 per barrel after two days of declines, as investors weighed developments in Venezuela and risks to supply from Russia, Iraq and Iran, reported by BNN Bloomberg.
The Canadian Press said oil prices have been “zigzagging” since US President Donald Trump ousted Venezuela’s leader, with markets now “playing catch‑up” after an initially muted reaction.
Hadiza Djataou, vice-president and portfolio manager of global bonds at Mackenzie Investments, told The Canadian Press that Canadian equities “benefited from tailwinds in the energy market,” but she does not see the current support as something that will “continue to be maintained” cyclically.
In single-name action, MDA Space Ltd jumped 6.6 percent after the space and defence technology company said it was chosen by the US Missile Defense Agency for SHIELD, a homeland missile defence program, Reuters reported.
The Canadian dollar traded at 72.12 cents US, down from 72.34 cents US the previous day, according to BNN Bloomberg.
On Wall Street, sector rotation mattered more than index levels.
The Dow Jones industrial average gained 270.03 points to 49,266.11, the S&P 500 edged up 0.53 points to 6,921.46 and the Nasdaq composite fell 104.26 points to 23,480.02.
The yield on the 10‑year US Treasury inched up to 4.18 percent from 4.15 percent late Wednesday, The Canadian Press reported.
Macro data kept the US growth narrative intact.
The Canadian Press said US initial jobless claims rose by 8,000 to 208,000 for the week ending Jan. 3, still historically low and seen as a proxy for layoffs.
The Canadian Press also reported stronger‑than‑expected productivity and a narrower‑than‑expected trade deficit.
Djataou told The Canadian Press that this backdrop means “the US growth and the US economy are doing OK, and there’s no reason for risk to be challenged.”
Defence stocks were among the biggest US winners after Trump said he wants to increase US military spending to US$1.5tn in 2027 from US$901bn to build the “Dream Military,” according to BNN Bloomberg.
L3Harris Technologies climbed 5.2 percent, Lockheed Martin rose 4.3 percent and Northrop Grumman added 2.4 percent, recovering from losses the previous day after Trump criticized contractors for making equipment too slowly, those outlets reported.
RTX, which Trump called the “slowest in increasing their volume,” gained 0.8 percent.
The Canadian Press quoted Djataou as saying “defence shares are going to continue to be supported in an environment where Trump obviously has decided to be somewhat geopolitically more active.”
Not all US names participated. Nvidia fell 2.2 percent, giving back part of a near 40 percent gain last year, according to BNN Bloomberg.
Djataou told The Canadian Press that when stocks reach “extreme valuations,” investors “tend to take chips off the table,” adding there is also “uncertainty in how much AI is actually going to deliver.”
The February gold contract slipped US$1.80 to US$4,460.70 an ounce, reported by BNN Bloomberg, even as the broader materials sector, including metal miners, gained 0.8 percent, according to Reuters.
