4:45 p.m. ET: OPEC deal “an antiseptic” rather than a cure for oil markets

North American equity markets finished the week modestly in the green, with the S&P/TSX Composite Index, S&P 500, Dow Jones Industrial Average and Nasdaq Composite finishing the shortened trading week up about one per cent. The S&P 500 posted its largest weekly gain since the 1970s, rising more than 10 per cent for the week.

In Toronto, health care, materials and consumer discretionary sectors led the market higher. MTY Food Group Inc. and Bausch Health Cos Inc. were the lead gainers on a stock-specific basis.

Oil prices nosedived, with U.S. benchmark West Texas Intermediate falling nearly seven per cent as markets were disappointed by the reported degree of OPEC’s supply cuts. According to Bloomberg, the cartel would cut output by 10 million barrels per day, though questions remain over whether the threshold will be set on year-to-date averages or present daily output after Saudi Arabia ramped up production.

There’s some speculation those cuts won’t be enough to blunt the demand shock from the COVID-19 outbreak. In an email to BNN Bloomberg, IHS Markit analyst Kevin Birn said such a cut would help, but wasn’t a cure-all for the current oil glut.

“The 10 million cut is significant and may allow production to find adequate storage through this period, but it is unlikely to resolve the impact of the demand shock entirely,” he said. “Still it may prevent even lower potential prices for many upstream producers globally.”

RBC Capital Markets managing director and global head of commodity strategy, Helima Croft, took a similar tact, telling BNN Bloomberg the cuts would be a salve for the wound caused by the massive drop in oil prices, but is by no means a cure.

“It allows you to apply antiseptic, as opposed to salt, to the wound.”

12:30 p.m. ET: North American equity markets hold on to gains

North American equity markets continued to trade in positive territory through the midday, with the S&P/TSX Composite, S&P 500, and Dow Jones Industrial Average notching gains north of two per cent and the tech-heavy Nasdaq Composite posting a ore modest one-per-cent gain.

In Toronto, the info tech, materials and real estate sectors posted the largest percentage advances, while consumer staples were the only TSX subgroup to fall into negative territory.

200 of the composite’s 230 members were in the green, led by MTY Food Group Inc. and Bausch Health Cos Inc.

Oil prices were volatile, but the U.S. benchmark West Texas Intermediate rose more than three per cent amid optimism over a potential global production curtailment. Alberta’s Western Canadian Select fell more than 16 per cent to trade at US$6 per barrel, though Canadian crude is only priced a handful of times per day.

9:40 a.m. ET:

North American equity markets rose modestly at the open, with the S&P/TSX Composite Index, S&P 500, Dow Jones Industrial Average and the Nasdaq Composite posting gains of about one per cent in early trading.

Oil rallied nearly five per cent on speculation the OPEC+ group could reach a production curtailment agreement at Thursday’s meeting, though questions remain on the output levels that curtailment would be based on, given Saudi Arabia’s massive ramp-up in production in its price war with Russia. Canadian crude hovered at US$7.25 per barrel.

The Canadian dollar rose against its U.S. counterpart to trade at about 71.60 cents U.S. in spite of the record-shattering 1.01 million job losses Canada recorded in March. The U.S. dollar was broadly weaker against its major market peers, helping to explain the loonie’s move higher against the benchmark greenback.