Canadian stocks rose to the highest in six weeks after lenders rallied as the central bank raised its 2013 growth forecast and investors analyzed testimony from U.S. Federal Reserve Chairman Ben S. Bernanke.
Royal Bank of Canada, the nation’s largest lender, climbed to a seven-week high. Pengrowth Energy Corp. surged 8.3 percent as at least two analysts upgraded the company. Cineplex Inc. (CGX) advanced to a record high after offering to acquire a digital signage company. B2Gold Corp. and Torex Gold Resources Inc. sank at least 7.8 percent as the price of gold slumped.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 51.88 points, or 0.4 percent, to 12,568.77 at 4 p.m. in Toronto, the highest close since June 4. Trading was 5.6 percent lower than the 30-day average.
“The banks are up off of U.S. banks, like Goldman Sachs, whose results so far are pretty good,” said John Goldsmith, deputy head of equities with Montrusco Bolton Investments in Toronto. The firm manages about C$5.6 billion. “Until the end of the month when Canada earnestly kicks off its earnings season, a lot of it will be led by earnings from the States.”
The Fed’s Bernanke said in prepared testimony to Congress this morning that the central bank’s asset purchases “are by no means on a preset course” and could be either reduced or expanded as conditions warrant.
Bank of Canada Governor Stephen Poloz kept his main interest rate unchanged at 1 percent in his first policy decision since taking over the job in June. He said there will be a “gradual normalization” of borrowing costs over time as slack in the economy disappears and inflation picks up.
The central bank raised its economic growth forecast for this year to 1.8 percent from an April prediction of 1.5 percent, while lowering the 2014 prediction to 2.7 percent from 2.8 percent.
Poloz is counting on exports and business investment to accelerate growth in the world’s 11th largest economy. Expansion has been slowed by weak foreign demand, leading to the longest streak of trade deficits in a quarter century.
More than 60 Canadian companies on the TSX are scheduled to report second-quarter earnings in the next two weeks. Bank of America Corp. beat analysts estimates today, posting a 63 percent gain in second-quarter profit. Goldman Sachs Group Inc. said yesterday it doubled its earnings, beating forecasts.
Eight of 10 groups in the S&P/TSX advanced, with financial stocks rising 1 percent as a group.
Royal Bank added 2 percent to C$63.80, the highest close since May 29. Bank of Nova Scotia gained 1.6 percent to C$58.04 and Canadian Imperial Bank of Commerce added 1.5 percent to C$77.12.
Pengrowth Energy surged 8.3 percent to C$5.88, the biggest gain since March 2009, after the oil producer said yesterday it has agreed to sell C$700 million of non-core assets that will be used to fund the first phase of its Lindbergh oil-sands project. Jeremy Kaliel, analyst with CIBC World Markets, and Jonathan Fleming, analyst with Cormark Securities Inc., each raised their ratings for the stock.
Cineplex, Canada’s largest movie theater chain, added 1.4 percent to C$38.22, the highest close since its initial offering in 2003. The Toronto-based company said today it has offered to acquire London, Ontario-based EK3 Technologies Inc. for an initial price of C$40 million. That figure could rise to C$78 million if certain operating targets are achieved in 2015.
Torex Gold retreated 7.8 percent to C$1.30 and B2Gold lost 7.9 percent to C$2.55 as gold futures for December delivery fell 1 percent to settle at $1,278.80, the biggest loss since July 5.
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