Canadian stocks rose, with energy and financial shares leading gains, as the market rebounded after a drop yesterday triggered by concern the U.S. central bank may raise interest rates by the middle of next year.
Verde Potash Plc rose 14 percent after the fertilizer miner increased its resource estimate at its Cerrado Verde project in Brazil. Knight Therapeutics Inc. rose 12 percent after winning approval from the U.S. Food and Drug Administration for its Impavido drug. AirBoss of America Corp. (BOS), which makes rubber products, fell 6.7 percent after reporting a fourth-quarter loss.
In a press conference at the end of a two-day meeting yesterday, Fed Chair Janet Yellen said the central bank’s stimulus program could end this fall and benchmark interest rates could rise six months later. The Fed had not previously given a time frame for the rate raise. Selling sped up in equities and bond yields jumped in U.S. markets just after 3 p.m. New York time yesterday when Yellen spoke about the timing of a potential interest rate raise.
“People are parsing her comments too much, but she was pretty consistent that they are working on a forecast,” said John O’Connell, chief executive officer at Davis Rea Ltd. in Toronto, which manages about C$600 million. “If you’re upset the rates target has been pushed forward by 90 days, then you shouldn’t be investing in stocks in the first place.”
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 27.79 points, or 0.2 percent, to 14,361.83 at the close in Toronto. The index has risen 5.4 percent this year.
Verde Potash rose 14 percent to C$1.68 after increasing resource estimates at its project in Brazil. Potash is used as a fertilizer to strengthen plant roots. The company said it plans to build an open-pit mine at the site and sell directly to the Brazilian agricultural market.
Knight Therapeutics rose 12 percent to C$5.55 after the U.S. Food and Drug Administration approved the company’s Impavido drug, which is used to treat a tropical disease called leishmaniasis.
AirBoss of America fell 6.7 percent to C$7.98 after reporting a fourth-quarter loss of 3 cents a share, compared with a gain of 8 cents a share for the same period in the previous year. The Newmarket, Ontario-based company also said Stephen Richards, who served as chief financial officer and chief operating officer, had resigned.
Coal miner Walter Energy Inc. fell 20 percent to C$8.13 after Bank of America Corp. said the commodity will be “depressed” for the next several years. Benchmark contract prices for metallurgical coal, which is used to make steel, are at the lowest since 2010.
Westshore Terminals Investment Corp. fell 6.4 percent to C$33.21. The company stores and loads coal at the Port Metro Vancouver, where a strike by truckers is affecting cargo shipments.
Concordia Healthcare Corp. rose 7.9 percent to C$17.08 after announcing an agreement to buy the drug Donnatal, a treatment for irritable bowel syndrome, from Revive Pharmaceuticals.
To contact the reporter on this story: Gerrit De Vynck in Toronto at firstname.lastname@example.org