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Blockbuster Rogers-Shaw deal helps lift TSX to new record, U.S. stock markets up

TORONTO — The records keep rolling in for Canada's main stock index, with a big boost for the telecom sector Monday thanks to Rogers Communications' proposed $26-billion purchase of Shaw Communications. The S&P/TSX composite index closed up 103.

TORONTO — The records keep rolling in for Canada's main stock index, with a big boost for the telecom sector Monday thanks to Rogers Communications' proposed $26-billion purchase of Shaw Communications. 

The S&P/TSX composite index closed up 103.43 points to 18,954.75 after hitting an intraday record of 18,964.29.

Telecommunications surged 6.4 per cent with shares of Shaw increasing 41.6 per cent to $33.85, about half way between their Friday close and the $40.50 bid price.

"The deal in the big picture kind of makes sense for both companies; just try to get bigger to compete with Bell and Telus," said Michael Currie, vice-president and investment adviser at TD Wealth.

But with successive federal governments insisting they want more competition in the Canadian telecom sector, investors aren't certain if the deal will gain approval from regulators.

"I think they're completely on the fence," Currie said in an interview.

Shaw's shares would likely be trading at $38 to $40 if investors were very certain of success and $26 to $28 if they were very pessimistic.

"The fact (the shares closed Monday) almost right in the midway point between the deal price and the close price says there's just a lot of uncertainty on both sides."

Nine of the 11 major sectors on the TSX were higher with only energy and financials down.

Energy lost 1.2 per cent as crude oil prices fell with Arc Resources Ltd. down 5.7 per cent and Seven Generation Energy Ltd. off 5.5 per cent.

The April crude oil contract was down 22 cents at US$65.39 per barrel and the April natural gas contract was down 11.6 cents at US$2.48 per mmBTU. 

Currie said oil prices decreased even though demand got a boost from strong manufacturing data in China, and Saudi Arabia vowing to cut supply to some Asian buyers.

"So strong economy and production cuts should be very favourable for oil, but oil's had a really nice run, it hasn't really dropped that much," Currie said of the modest decrease in prices.

The Canadian dollar traded for 80.13 cents US compared with 80.04 cents US on Friday. 

Health care gained 4.2 per cent with cannabis producers Aphria Inc. up 10.9 per cent and Aurora Cannabis Inc. 5.5 per cent higher.

Materials was up 1.2 per cent on higher metals prices with Pan American Silver Corp. gaining 5.2 per cent and New Gold Inc. up 4.2 per cent.

The April gold contract was up US$9.40 at US$1,729.20 an ounce and the May copper contract was essentially flat at US$4.14 a pound. 

The Toronto stock market has been a seven-day winning streak, helped Monday for strong Canadian manufacturing and housing data and continued optimism about the economic reopening.

In New York, the Dow Jones industrial average and S&P 500 also set new records, following last week's strong showing.

The 30-stock Dow rose 174.82 points at 32,953.46. The S&P 500 index increased 25.60 points at 3,968.94, while the Nasdaq composite was up 139.85 points at 13,459.71. 

Markets will be watching closely on Wednesday for any comments about rising interest rates because of fears of inflation.

Almost every indicator in Canada and the United States is showing a positive recovery, said Currie.

"A lot of that, especially in the States, is just the reopening trade. More and more states, more and more counties are reopening, certainly a lot faster than Canada is and we're starting to see some of the optimism there," said Currie.

"It's nice to be holding gains after a really strong week. Monday is typically the worst day in the week so we're not really seeing much of a pullback after very strong gains across the board."

This report by The Canadian Press was first published March 15, 2021. 


Ross Marowits, The Canadian Press

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