Canada's main stock index closed up slightly Tuesday as oil rose, while the loonie and markets south of the border ended lower.
"It's another day where the TSX is outperforming U.S. indices, and that has not been the case over the last one, three, five, and 10 year periods," said Craig Jerusalim, portfolio manager of Canadian equities at CIBC Asset Management.
The shift is an inflection point that could set up Canadian equities well to outperform U.S. indices in the next little while, he said.
Jerusalim pointed to higher oil prices and a shrinking discount for Canadian crude, some hope on NAFTA negotiations wrapping up, and more attractive valuations for Canadian stocks compared with U.S. counterparts as key reasons for the shift.
"Those three combinations really set the TSX to shine and potentially attract some of the foreign money that left our markets over the last number of years," he said.
The Toronto Stock Exchange's S&P/TSX composite index ended up 12.20 points at 16,097.81, led by healthcare and industrials.
In New York, the Dow Jones industrial average closed down 193 points at 24,706.41. The S&P 500 index ended down 18.68 points at 2,711.45 and the Nasdaq composite index was down 59.69 points at 7,351.63.
The Canadian dollar averaged 77.66 cents US, down 0.62 of a US cent, as continued uncertainty over trade negotiations countered the support from higher oil prices, said Jerusalim.
"There are some concerns, that's why getting NAFTA signed and wrapped up would be a huge weight lifted off the Canadian economy and the Canadian dollar for that matter."
The weight on the Canadian dollar has, however, helped Canadian oil and gas producers who are benefiting both from rising crude prices while also reaping the benefits of a lower loonie by selling barrels at US dollars.
"Normally when oil prices rise to the extent that they have, the Canadian dollar would rise with it, but it's really been range-bound in that 77 to 79 cent range over the last little while, and that's been a boon for the Canadian energy and producing companies."
The June crude contract ended up 35 cents at US$71.31 per barrel as supply uncertainties from Venezuela and Iran continued while demand remains strong.
The June gold contract closed down $27.90 at US$1,290.30 an ounce, sending the S&P/TSX global gold index down 1.69 per cent. Jerusalim said the drop could be attributed to the rise in the U.S. dollar after retail sales numbers came in line with expectations.
The June natural gas contract was unchanged at US$2.84 per mmBTU, the July copper contract was down three cents at US$3.06 a pound.
