Canadian Stocks Rise as U.S. Consumer Spending Tops Forecasts
Canadian stocks rose for a second day, led by energy and financial companies, after the U.S. reported a bigger increase in consumer spending then most economists had forecast.
Canadian Natural Resources Ltd. (CNQ), Canada’s second-largest energy company by market value, gained 3.5 percent as crude futures advanced 2.2 percent. Bank of Nova Scotia (BNS), the country’s third-biggest lender by assets, climbed 2 percent after the U.S. consumer-spending figure for July surpassed 73 of 74 economist forecasts in a Bloomberg survey. Northgate Minerals Corp. (NGX), which mines gold in Australia, soared 28 percent after agreeing to be bought by AuRico Gold Inc.
The Standard & Poor’s/TSX Composite Index rose 177.34 points, or 1.4 percent, to 12,504.85.
“The market is figuring in a 40 percent chance of a double-dip recession,” Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, said in a telephone interview. The firm oversees C$1.6 billion ($1.6 billion). “Any kind of clues that maybe that’s not going to happen is going to help.”
The stock benchmark has slipped 3.4 percent this month and is heading for its sixth-straight monthly decline. Energy stocks have led the retreat as oil futures have tumbled 8.6 percent with economic data signaling a slowing recovery. The industry accounts for 26 percent of Canadian stocks by market value, according to Bloomberg data.
U.S. consumer purchases increased 0.8 percent last month, the Commerce Department said today in Washington. Economists had forecast a gain of 0.5 percent, according to the median estimate in a Bloomberg survey.
Oil futures advanced to the highest settlement since Aug. 17. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, climbed 2.6 percent to C$30.56. Canadian Natural rose 3.5 percent to C$36.05. Bankers Petroleum Ltd. (BNK), which operates in Albania, surged 8 percent to C$5.02, a sixth-straight gain.
All S&P/TSX banks and insurers advanced. Scotiabank increased 2 percent to C$52.35. Toronto-Dominion Bank (TD), Canada’s second-largest lender by assets, climbed 1.3 percent to C$74.88. Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, rallied 4.6 percent to C$13.29 after Hurricane Irene did less damage than Kinetic Analysis Corp., a firm that predicts the effects of disasters, had forecast.
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 2.2 percent to C$57.37 as corn reached an 11-week high. Agricultural futures have advanced as hot weather threatened yields in the U.S. Midwest.
Northgate jumped 28 percent, the most since December 2008, to C$3.98 after agreeing to be bought by AuRico for C$1.46 billion.
AuRico, the gold producer formerly known as Gammon Gold Inc., slumped 19 percent, the most since January 2002, to C$11.05. Precious-metals producer Primero Mining Corp. (P) sank 16 percent to C$3.47 as Northgate scrapped its C$370 million deal to buy the company.
Other precious-metals stocks fell as gold futures dropped 0.3 percent. Barrick Gold Corp. (ABX), the world’s largest producer of the metal, decreased 1.9 percent to C$49. Goldcorp Inc. (G), the world’s second-biggest company in the industry by market value, declined 1.3 percent to C$50.30. Silver Wheaton Corp. (SLW), Canada’s fourth-largest precious-metals company by market value, lost 2.3 percent to C$37.91.
Base-metals and coal producers climbed. Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, increased 2.6 percent to C$41.65. Lundin Mining Corp. (LUN), which produces base metals in Europe, surged 9.9 percent to C$5.66. First Quantum Minerals Ltd. (FM), Canada’s second-biggest publicly traded copper producer, gained 5.5 percent to C$22.49.
An index of S&P/TSX consumer-discretionary stocks rallied 2.1 percent. Magna International Inc. (MG), Canada’s largest auto- parts maker, advanced 4.4 percent to C$37.20 after the U.S. consumer-spending data reflected gains in vehicle sales. Imax Corp. (IMAX), the maker of giant-screen movie-projection systems, jumped 8.8 percent to C$17.24. Yoga-wear retailer Lululemon Athletica Inc. (LULU) rose 5 percent to C$53.96.
Uranium producer Denison Mines Corp. (DML) soared 10 percent to C$1.64, extending its two-day gain to 19 percent. Cameco Corp., the world’s largest producer of the nuclear fuel, offered to buy Hathor Exploration Ltd. for C$520 million on Aug. 26.
BlackBerry maker Research In Motion Ltd. rallied 4.6 percent to C$29.98 to extend its surge since Aug. 8 to 37 percent. Kevin Smithen, an analyst at Macquarie Group Ltd., raised his 12-month price estimate on RIM’s U.S.-traded shares to $42 from $40, citing international growth and new smartphones in a note to clients.
To contact the reporter on this story: Matt Walcoff at Mwalcoff1@bloomberg.net
To contact the editor responsible for this story: Nick Baker at Nbaker7@bloomberg.net