Canadian stocks rose after Alcoa Inc. began the earnings-reporting season with profit that topped the average analyst estimate and the U.S. and Canada reported increases in imports.
Cenovus Energy Inc., the oil company spun off from EnCana Corp. in December, advanced 2.7 percent as crude futures rallied to a two-week high. Ivanhoe Mines Ltd. soared 14 percent after saying it will rescind a covenant with Rio Tinto Group that prevents it from issuing more than 5 percent of its common shares to other investors. BlackBerry maker Research In Motion Ltd. gained 3 percent amid speculation rival Apple Inc. will recall its latest iPhone.
The Standard & Poor’s/TSX Composite Index rose 107.08 points, or 0.9 percent, to a two-week high of 11,672.84.
“The results from Alcoa, no doubt the numbers were a lot better than expected,” said Stephen Gauthier, who helps manage C$500 million ($486 million) as a money manager at Fin-XO Securities in Montreal. “It’s only one player, but it’s a pretty good start. Expectations are quite high for earnings.”
The S&P/TSX gained 3.3 percent last week, the most since October, after tumbling 4.4 percent the week before. Canadian shares gained as the country reported job growth five times the median economist estimate and France’s Total SA agreed to buy oil sands developer UTS Energy Corp. The index slipped less than 0.1 percent yesterday.
Alcoa, the largest U.S. aluminum producer, reported second-quarter profit that beat the average of 17 analyst estimates by 14 percent, excluding certain items, yesterday. The company, whose results unofficially mark the start of the earnings-reporting season in the U.S., said it expects aluminum sales for automotive uses to advance 3 percent to 8 percent this year.
Second-quarter earnings for S&P/TSX materials and energy stocks are forecast to increase 48 percent and 33 percent, respectively, from last year, according to National Bank of Canada. Those two industries make up 46 percent of Canadian stocks by market value.
Analysts estimate per share profit excluding some items at Teck Resources Ltd., the S&P/TSX company whose share price most closely tracks Alcoa’s, will jump 90 percent from last year, according to Bloomberg data. The shares rose 1.3 percent to C$34.89.
Shares of Canada’s largest auto-parts makers surged. Magna International Inc., the country’s biggest auto-industry company, gained 4.1 percent to C$73.87, while Linamar Corp. advanced 6.4 percent to C$19.05.
Canada and the U.S. each reported unexpected increases in trade deficits for May today due to higher demand for foreign goods. Canada’s deficit of C$503 million was the largest in eight months, Statistics Canada said.
RIM, Canada’s largest technology company, rallied 3 percent to C$57.53, stretching its three-day gain to 11 percent.
A RIM tablet is in the works that will support Adobe Systems Inc.’s Flash technology, giving it an advantage over Apple’s iPad, BetaNews reported, citing “a source close to RIM.” Yesterday, Consumer Reports magazine said it isn’t recommending the iPhone 4 due to a hardware flaw that causes signal quality to degrade.
The S&P/TSX Banks Index climbed for a sixth day, the longest streak since Feb. 19. Royal Bank of Canada, the country’s biggest bank, increased 1 percent to C$54.88. Canadian Imperial Bank of Commerce, Canada’s fifth-largest, climbed 2.1 percent to C$69.60. Bank of Nova Scotia, the No. 3 bank by assets, rose 2.8 percent to C$52, contributing the most to the S&P/TSX Composite’s gain.
Ivanhoe Mines, which is developing the Oyu Tolgoi copper mine with Rio Tinto, surged 14 percent, the most in 10 months, to C$17.07. Rio Tinto’s representative on Ivanhoe Mines’ board of directors resigned yesterday in the dispute which began with Ivanhoe Mines’ adoption of a shareholders’ rights plan.
An index of S&P/TSX energy stocks advanced for a sixth day as oil futures increased 2.9 percent.
Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, rose 2.2 percent to C$16.90. Cenovus gained 2.7 percent to C$30.37. Nuvista Energy Ltd., which jumped 7.4 percent yesterday after announcing the results of a well test in Alberta, rallied another 4.5 percent to C$11.89 today on an upgrade from Bank of Montreal analyst Mark Leggett.
Westport Innovations Inc., a maker of biogas and natural gas engines, climbed 5.9 percent to C$17.43 after announcing a deal to develop products for Sweden’s Volvo AB.
Alamos Gold Inc., which mines the precious metal in Mexico, led the S&P/TSX with a 5 percent drop to C$14.54. The company said second-quarter production declined 9 percent from a year earlier and 8 percent from the first quarter due in part to water conservation measures put in place during a drought.
Canaco Resources Inc., which explores for gold in Africa, advanced a day after releasing drilling test results, surging 41 percent to C$1.52, the highest in at least eight years. Canaco traded at 8 cents a share a year ago.