Canadian stocks rose as industrial and energy shares advanced amid improving confidence in economic growth in the U.S., the country’s largest trading partner.
Energy companies added 0.7 percent as a group. Canadian National Railway Co. gained 1.6 percent and Canadian Pacific Railway Ltd. jumped 4.4 percent to a record as industrial shares rallied. Chorus Aviation Inc. fell 12 percent after Canaccord Genuity Corp. downgraded the stock. BlackBerry lost 3.1 percent after announcing plans to open up its BBM instant-messaging system to other smartphones.
The Standard & Poor’s/TSX Composite Index rose 47.50 points, or 0.4 percent, to 12,577.05 at 4 p.m. in Toronto. The benchmark equity gauge has added 1.2 percent this year. Trading volume was 13 percent lower than the 30-day average.
“There’s a shift as people are getting more comfortable as they reduce staples to more cyclical stocks,” Robert McWhirter, fund manager of Selective Asset Management Inc., said by telephone. The Toronto-based firm manages about C$3 million ($3 million). “The market seems to be moving back toward resumption of an upward trend.”
U.S. equities rallied as confidence among U.S. small businesses climbed in April to a six-month high, bolstering optimism over growth in the world’s largest economy. David Tepper, co-founder and owner of hedge fund Appaloosa Management LP, told CNBC he’s still bullish on U.S. stocks and that the economy is getting better.
Energy shares contributed most to gains in the benchmark Canadian equity index, rising 0.7 percent as a group even as oil retreated for a fourth day.
Suncor Energy Inc., Canada’s largest energy company by market value, advanced 1.2 percent to C$32.42. Athabasca Oil Corp. added 2.3 percent to C$5.89.
Industrial stocks climbed 1.7 percent for the second-biggest gain out of 10 groups in the S&P/TSX. Canadian National Railway added 1.6 percent to C$103.73, the highest in two months. Canadian Pacific Railway jumped 4.4 percent to a C$136.91, the highest since it began trading in 2001.
Kirkland Lake Gold Inc. surged 14 percent to C$3.82 for the biggest gain in the S&P/TSX. The miner reported fiscal-year gold sales that met its updated forecast and said sales would jump in the year ending April 30, 2014.
The S&P/TSX Materials Index was unchanged, maintaining its loss for the year at 23 percent, as industrial metals slumped on concern that growth will slow in China, the biggest consumer of raw materials.
Money managers are the most bearish on commodities in more than four years as a majority expected a weaker Chinese economy for the first time in 14 months, a Bank of America survey showed.
A net 29 percent of the fund managers surveyed were underweight the asset class in May as their positions “collapsed” to the lowest level since December 2008. One in four now consider a “hard landing” in China as the biggest risk to their investments. The bank surveyed professional investors who together oversee $517 billion.
Separately, JPMorgan Chase & Co. reduced its second-quarter growth forecast for the Chinese economy to 7.8 percent from 8 percent and the full-year estimate to 7.6 percent from 7.8 percent. The firm cited weak domestic demand suggested by April data.
Chorus Aviation fell 12 percent to C$2.38,the lowest since April 2009. Canaccord Genuity analyst David Tyerman lowered his recommendation on the carrier to sell from buy. The Halifax, Nova Scotia-based regional airline reported profit that missed analysts’ estimates on May 10 and halved its quarterly dividend amid a dispute with Air Canada. The stock has erased 38 percent this year.
BlackBerry, formerly known as Research In Motion Ltd., lost 3.1 percent to C$15.55. Chief Executive Officer Thorsten Heins said today the company will begin offering BBM as a free application on Apple Inc.’s iPhone and devices running Google Inc.’s Android, a move that loosens BlackBerry’s grip on one of its most valuable services.
Heins also unveiled the BlackBerry Q5, a lower-end phone with a physical keyboard that comes in four colors, at an annual conference in Orlando, Florida. The new model is part of the CEO’s turnaround plan for the long-struggling smartphone maker.