Canada Stocks Rise in Longest Rally of 2014 as Gold Gains

Canadian stocks rose a sixth day, the longest streak of the year, as gold advanced amid growing demand in the U.S. and China while Federal Reserve Chairman Janet Yellen pledged to reduce stimulus in “measured steps.”

Detour Gold Corp. and Argonaut Gold Inc. rose at least 8.7 percent. CGI Group Inc. (GIB/A) gained 4.4 percent after being selected by APG, a Dutch pension provider, to provide application services. Horizon North Logistics Inc. jumped 8.6 percent after winning contracts to provide camp facility services for two oil-sands and natural-gas projects in Alberta and British Columbia.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 86.81 points, or 0.6 percent, to 13,880.99 at 4 p.m. in Toronto. The benchmark equity gauge has jumped 2.9 percent in the past six days, the longest rally since Dec. 27.

“The market is stabilizing a little bit here, there’s a rally in precious metals,” said Brian Huen, fund manager at Red Sky Capital Management Ltd. in Toronto. The firm manages about C$230 million ($208.3 million). “People are focused on the Yellen testimony with Congress today and the direction of the Fed. Whatever the Fed does will be driven by economic data, and the Fed will continue on the course of tapering and providing guidance as things change. It will be gradual, I don’t think in her first take things will change that much.”

Yellen said she will maintain her predecessor’s policies by scaling back stimulus in “measured steps” amid a continuing recovery in the labor market. The Fed reduced its monthly bond purchases to $65 billion from $85 billion during its last two meetings.

Canadian Federal Finance Minister Jim Flaherty released a budget today that includes higher taxes on cigarettes, benefit cuts for retired government workers and aid for carmakers. The plan projects a deficit of C$2.9 billion for the fiscal year starting April 1, before swinging to a surplus of C$6.4 billion in 2015.

Metals Rally

The price of gold climbed 1.2 percent in New York to settle at $1,289.80 an ounce in New York for a fifth day of gains, the longest winning streak since August 2012. The gold price had dipped earlier amid Yellen’s testimony to lawmakers. Volume for Shanghai’s benchmark bullion spot contract surged to a nine-month high yesterday and sales of American Eagle gold coins by the U.S. Mint jumped 63 percent in January.

Raw-materials stocks added 1.8 percent as a group, the biggest gain in the S&P/TSX. Nine of 10 industries in the gauge advanced on trading volume 29 percent higher compared with the 30-day average.

Gold, Silver

Detour Gold soared 12 percent to C$9.20, for the highest close since September, and Argonaut Gold climbed 8.7 percent to C$5.86 as precious metals producers accounted for nine of the top 10 movers in the S&P/TSX.

Fortuna Silver Mines Inc. increased 5.3 percent to C$4.93 and Silvercorp Metals Inc. rallied 5.3 percent to C$3.18 as the price of silver rose 0.2 percent in New York for a seventh day of gains, the longest streak since August.

CGI Group rose 4.4 percent to C$34.32, the most since September. The Montreal-based information technology company said it has secured a three-year contract with APG with an annual minimum value of 10 million euros ($13.7 million).

Horizon North Logistics (HNL) soared 8.6 percent to C$7.56, the biggest gain since October 2010, after disclosing the contracts late yesterday. The company will build a 400-person camp facility in the Fort McMurray, Alberta, oil-sands region and another for 350 people in northeastern British Columbia.

“We remain positive on both mobile accommodation and Horizon North Logistics specifically,” said Greg Colman, analyst with National Bank Financial, in a note to clients today. “These contract awards reinforce those views.”

Colman maintained his outperform rating for the stock, the equivalent of a buy, with a C$9.50 12-month price target. The stock has nine buys and one hold, according to data compiled by Bloomberg.

Cineplex Inc. (CGX), Canada’s largest cinema operator, lost 1.5 percent to C$40.88 after posting adjusted earnings of 32 Canadian cents a share in the fourth quarter, short of analysts’ projections of 48 cents.

Net income slumped 38 percent to C$20.2 million from C$32.7 million as same-store attendance and box-office revenues declined due to a weaker slate of films in the quarter.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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