Canadian stocks rose the most in almost two weeks as investors speculated the impact of the first U.S. government shutdown in 17 years would be limited.
Air Canada increased 6.2 percent to pace gains among industrial stocks. Valeant Pharmaceuticals International Inc. climbed 4 percent after one of its units agreed to a licensing deal for a skin product. Airboss of America Corp. surged 9.3 percent after agreeing to acquire Flexible Products Co. Semafo Inc. and Barrick Gold Corp. dropped more than 3.4 percent as the price of gold slumped below $1,300 to a seven-week low.
The Standard & Poor’s/TSX Composite Index rose 60.25 points, or 0.5 percent, to 12,847.44 at 4 p.m. in Toronto, the biggest gain since Sept. 18. The index rallied 5.4 percent in the last quarter, the best quarterly gain in a year. Trading volume was 9.9 percent higher than the 30-day average today.
“Part of it may be the market has priced in a short shutdown of the U.S. government, but if it’s extended and you run into the debt impasse as well it could get messy,” said Irwin Michael, portfolio manager with ABC Funds in Toronto. The firm manages about C$800 million ($775 million). “Investors want to get through one roadblock at a time so hopefully the shutdown will be short.”
The U.S. government started a shutdown that will idle as many as 800,000 federal workers as Republicans and Democrats failed to negotiate a resolution over spending legislation. Congress now faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17.
“It would be political suicide for the Republicans to risk being seen as pushing the shutdown beyond October,” said Avery Shenfeld, chief economist with CIBC World Markets, in a note to clients. “Markets could still become more fretful if we actually cross the debt ceiling deadline, but ultimately any market moves would be reversed as the crisis passed.”
National Bank of Canada gained 0.7 percent to C$85.69 and Bank of Montreal rose 0.6 percent to C$69.18. The S&P/TSX Financials Index added 0.6 percent, for the highest close in more than five years.
Pacific Rubiales Energy Corp. climbed 4.1 percent to C$21.17 and Talisman Energy Inc. increased 4.9 percent to C$12.40 as energy stocks closed at the highest level since July.
Crude for November delivery slipped 0.3 percent to $102.04 a barrel in New York for a third day of declines.
“Crude remains above $100. Oil companies will do quite well in this environment if you believe the economy is slowly improving,” Michael said.
Encana Corp. rose 0.8 percent to C$17.94 after restructuring its senior management team. Greg Pardy, analyst with Royal Bank of Canada, said in a note the changes are “positive” as establishing senior leadership is important to Encana’s game plan.
Valeant Pharmaceuticals jumped 4 percent to C$111.66, a record high, after unit Obagi Medical Products said yesterday it has acquired a global exclusive license to market a skin lightening compound from Sirona Biochem Corp.
Air Canada, the top-performing stock in the S&P/TSX this year, climbed 6.2 percent to C$3.75 as industrial shares added 1.5 percent as a group. Air Canada, the nation’s largest airline, has jumped 114 percent this year.
Airboss, a rubber-based products maker, soared 9.3 percent to C$7.20, the highest since July 2011. The company said yesterday it will acquire Flexible Products in a deal worth about $51 million.
Semafo sank 9.3 percent to C$2.25 and Barrick Gold retreated 3.4 percent to C$18.60 as gold for December delivery tumbled 3.1 percent to $1,286.10 an ounce in New York. Gold has slumped 23 percent this year, headed for the first annual loss since 2000.