04:22 PM EDT, 10/07/2024 (MT Newswires) -- The Toronto Stock Exchange fell of a record high on Monday as rising oil prices and merger activity failed to boost the resources-heavy bourse.

The S&P/TSX Composite Index closed down 60.12 points to 24,701.71. Battery Metals and Energy are the biggest gainers, up 2.2% and 1.9% respectively; while Utilities and Health Care, down 1.6% and 1.3% respectively, are the biggest decliners.

West Texas Intermediate (WTI) continued to push higher on Monday, climbing for a fifth-straight session on expectations Israel is readying to retaliate against Iran following last week's missile attack on the country, heightening anxiety over a wider Middle Eastern war that could threaten Persian Gulf supplies. West Texas Intermediate crude oil for November delivery closed up US$2.76 to US$77.14 per barrel, the highest since Aug,15, while December Brent crude, the global benchmark, closed up US$2.88 to US$80.93.

Gold prices edged lower late afternoon on Monday, falling for a second day as Friday's robust U.S. employment report cut expectations for another outsized cut to U.S. interest rates. Gold for December delivery was last seen down US$5.20 to US$6,662.60 per ounce.

In stock specific news, this morning Canadian Natural Resources (CNQ.TO, CNQ) agreed to acquire of Chevron's (CVX) Alberta assets for US$6.5 billion (near C$8.775 billion). The acquisition, which will be funded entirely with cash, includes Chevron's remaining working interest in the Athabasca Oil Sands Project, adding about 62.500 barrels per day of production also with a higher stake in the Scotford Upgrader. Canadian Natural is also acquiring Chevron's 70% working interest in its Duvernay asset, estimated add 60,000 bpd in 2025.

In conjunction with the announcement, Canadian Natural is increasing its base dividend by 7% to $0.5625 per share (from $0.525 per share), payable in January, while cutting its return of capital framework to 60% of free cash flow returned over the short-term while net debt remains above $15 billion.

Despite Monday's drop, sentiment for the resources-heavy TSX remains bullish. After BMO Capital Markets on Friday adjusted its S&P/TSX price target by 4% to 25,500 from 24,500, today Rosenberg Research said active investors have "yet to fully buy into the rally" that has brought the TSX to new all-time highs while adding its research was "constructive" on commodities as "under-owned and overlooked."

In Canada, Rosenberg's Strategizer equity model ticked lower to 24.5 from 49.8, while remaining firmly in the neutral range. The research noted the TSX has gained nearly 12% since June and is up from consistent low-end 'neutral' and 'underweight' readings at that time. The research said: "An improved liquidity backdrop from the BoC [Bank of Canada] is occurring alongside still depressed sentiment and positioning indicators (contrarian positives). Investors have yet to fully buy into the rally that has brought the index to new all-time highs, unlike in the U.S.."

According to the research, a "murkier fundamental outlook" in Canada is keeping the TSX from 'buy' territory, but it said model scores will continue to be evaluated in the coming months.

At the sector level, the research said there was little change in the top rankings. Financials (#1) and Health Care (#2), Technology (#3), and Real Estate (#3 from #4), comprise an overall defensive/rate-sensitive tilt, it added.

Meanwhile, Rosenberg Research noted its commodity model scores remains in 'overweight' territory, despite a modest pullback to 74.7 in September from 79.2 prior. It said: "That such a small change in scores occurred alongside a +3% intra-month rally from the lows speaks to the large amount of pessimism embedded in valuations, and how long the runway ahead of potential gains may be. Sentiment, positioning, and technical categories rose on the month (contrarian negatives) but remain at benign levels."

It added: "Near-term volatility risks remain elevated, to be sure, but investors are still considerably 'underweight' the overall commodity complex to a degree that long-term investors can find considerable value at current levels - adding to, or beginning to build, positions in the portfolio."

According to the research, ongoing volatility in energy markets has led to an exclusive list of agricultural/food products (sugar, cotton, and wheat) and base metals (aluminum) at the top of the individual commodity rankings. As it pertains to oil specifically, it said the commodity sits squarely in the middle of the individual rankings list, providing a neutral outlook.

"While positioning is light and sentiment is bearish (contrarian positives), our models note too many crosswinds as they pertain to fundamentals (easing in time spreads show a loosening supply-demand backdrop, for example)."