The Toronto Stock Exchange is up 100 points midday with most sectors higher.
The best performers are miners (+2%) and info tech (+1.7%). Financials and utilities are down 0.9% and 0.4%, respectively.
In stocks, Morningstar Canada published a note entitled 'Energy Sector Outlook: Oil Stocks Have Growing Dividends and Room to Run' in which it said supportive economics and increased oil production will keep fueling the energy-sector revival, analysts say. The Morningstar Canada Energy Target Market Exposure Index has risen 32.1% in the year to date, outpacing the 9.8% gain for the Morningstar Canada Index.
Higher oil prices will continue to drive revenue for energy companies in the short term, Morningstar said. Supportive government policies and a favorable trade deal could pave the way for the sector's long-term growth.
In other news, Canada's financial system has functioned well through a challenging year as households and businesses remain in stable financial condition, and banks have strengthened their capacity to absorb shocks, said Bank of Canada on Thursday. However, vulnerabilities have increased in some parts of the system, the central bank noted in its annual Financial Stability Report (FSR). Stock and corporate debt valuations have risen and are high relative to historical norms. This makes markets more vulnerable to a sharp correction, the BoC added.
The issuance of global sovereign debt is also rising, and hedge funds are playing a bigger role in buying that debt, often using borrowed money, BoC said. In normal times, hedge fund activity helps keep markets running smoothly. But if conditions become strained, this activity could amplify stress and disrupt core funding markets, the central bank added. Individually, these and other vulnerabilities look "manageable", but the economic and geopolitical environment has become more volatile. This has made it more likely that a new shock or a combination of shocks could cause several vulnerabilities to crystallize at once. If this were to happen, these vulnerabilities could interact and reinforce each other, the BoC added.
A "cascading" series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales, the BoC continued, adding that funding markets could come under pressure, and stress could spread more broadly.
The FSR is an assessment of how existing vulnerabilities, or pockets of stress, could amplify shocks and ultimately spread across the financial system, the BoC said. New risks, particularly from artificial intelligence (AI) are emerging. While AI is expected to boost productivity and economic growth over time, it's sparking concerns about disruption in some sectors and about overinvestment. AI may also increase the speed, scale and sophistication of cyber attacks, it added.