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Toronto stock market gains 8.5 percent in January on surging crude oil prices

Canada’s main stock index rebounded from December’s selloff by gaining 8.5 per cent in January, fuelled by a surge in crude oil prices.

North American markets as a whole performed well in the month, led by the Nasdaq composite, which ended 9.7 per cent higher.

The gains were pretty impressive especially since the month started with investors unsure if there would be a temporary or so-called dead cat bounce or a sustainable rally, says Colin Cieszynski, chief market strategist for SIA Wealth Management.

“Certainly we’ve seen a fairly sizable rally unfold over the last few weeks, so January has been a particularly strong month and a very big rebound from the dismal December that we had.”

Since the turn of the century, January’s performance has been mixed, he said. This year’s results were the strongest in at least 14 years for the TSX.

The S&P/TSX composite index closed up 56.05 points to 15,540.60, marking the sixth consecutive daily gain. The Toronto market advanced by nearly 1,200 points in the month as it faced just three losing sessions.

Cieszynski said the Canadian market benefited from a recovery in U.S. markets, but higher oil prices and turnarounds in a number of commodities, including gold, silver, copper and forest products, also made positive contributions.

Several other sectors, such as industrials, health care, technology and consumer staples have also done well.

On Thursday, the market was led by gains by cannabis companies in the health-care sector, particularly Aphria Inc., which rose 13.5 per cent on heavy trading.

Materials and technology also increased, led by Barrick Gold Corp. with a contribution from CGI Group Inc. Energy was the lone sector to fall, losing more than one per cent.

Overall, the TSX rose even though the price of oil fell after two days of gains.

The March crude contract was down 44 cents at US$53.79 per barrel, marking an 18.4 per cent increase in January. The March natural gas contract was down four cents at US$2.81 per mmBTU.

The April gold contract was up US$9.70 at US$1,325.20 an ounce, up 3.4 per cent on the month. The March copper contract was up 1.7 cents at US$2.78 a pound.

The Canadian dollar traded higher at an average of 76.08 cents US compared with an average of 75.80 cents US on Wednesday and 73.30 cents at the start of the year.

In New York, the Dow Jones industrial average was down 15.19 points at 24,999.67. The S&P 500 index was up 23.05 points at 2,704.10, while the Nasdaq composite was up 98.66 points at 7,281.74.

Cieszynski foresees the rally continuing into February as gains are consolidated.

“I do think we could still see some choppiness and bumpiness and volatility in the markets but to me so far it looks like things have generally turned the corner and are starting to trend back upwards and that’s on both sides of the border.”

U.S. trade negotiations with China remain a lingering risk, but he said that as long as talks don’t break down, investors will remains cautiously optimistic that a deal can be reached by the March 1 deadline before America’s threatened increase in tariffs on Chinese imports.

“It’s actually been nice to see that support from investors has come back in as strongly in January as it did. It’s quite impressive.”

Companies, index and currency in this story: (TSX:ABX, TSX:GIB.A, TSX:APHA, TSX:GSPTSE, TSX:CADUSD=X)