Canadian stocks climbed a fourth day, trimming a monthly drop that sent shares into a bear market earlier this year, as crude prices rose and data showed the resource-rich nation’s economy expanded for the first time in three months.
The Standard & Poor’s/TSX Composite Index rose 0.4 percent to 12,644.48 at 11:34 a.m. in Toronto. The index has rallied 6.9 percent since hitting a two-and-a-half-year low on Jan. 20. While the benchmark equity gauge is still on track for its first negative January since 2010, the late rally among energy producers has boosted the S&P/TSX’s performance to the second- best among developed markets this year, behind only New Zealand.
“It’s a dash for trash,” said John Stephenson, chief executive officer of Stephenson & Co. Capital Management in Toronto. His firm manages about C$50 million. “We’ve had a few days in a row of rising oil prices and it’s disproportionately benefiting Canada. Energy rallies a bit and people buy the energy names, especially the most beat up.”
Health-care and raw material companies posted the biggest gains out of 10 groups in the S&P/TSX. Valeant Pharmaceuticals International Inc. jumped 6 percent after a two-day rout of 13 percent. Yamana Gold Inc. climbed 7.1 percent as the price of gold advanced.
Energy shares retreated after earlier gaining. Oil futures reversed after Russian Energy Minister Alexander Novak said that while OPEC member Venezuela has proposed a meeting next month, nothing is scheduled. Oil prices spiked after Novak on Thursday said the Organization of Petroleum Exporting Countries and other producers may meet to discuss output.
The broader S&P/TSX remains in the red for January, weighed down by losses among health-care and consumer discretionary stocks. Bombardier Inc., Concordia Healthcare Corp. and auto- parts manufacturer Linamar Corp. have been among the worst performers so far in 2016.
The S&P/TSX joined a global rally Friday after the Bank of Japan surprised investors by adopting a negative interest-rate strategy. The MSCI All-Country World Index advanced 1.2 percent for a second day of gains.
“Green arrows abound on this last trading day of the month in what has otherwise been a horrible start to the year,” David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc. in Toronto, wrote in a note.
A rebound in manufacturing and wholesaling helped Canada’s gross domestic product expand by 0.3 percent in November, matching economists’ forecasts and indicating the nation is shaking off the damage from a drop in commodity prices.
The S&P/TSX has performed better relative to other benchmarks after having “taken it on the chin” in 2015, when it was one of the worst performers in the developed world, Stephenson said.
“There is a huge amount of pent-up enthusiasm for energy and investors are excited to see a rally,” he said.
Eric Lam
©2016 Bloomberg News
