Canadian stocks rose, with the benchmark index near a three-year high, as banks rallied on better-than-forecast earnings and U.S. Federal Reserve Chair Janet Yellen said stimulus cuts could slow if growth weakens.
Toronto-Dominion Bank climbed 0.8 percent after Canada’s largest lender raised its dividend and reported better-than-estimated profit. Valeant Pharmaceuticals International Inc. added 1.6 percent after the company reported earnings that surpassed analysts’ forecasts. Catamaran Corp. plunged 11 percent after giving forecasts for 2014 that missed estimates.
The Standard & Poor’s/TSX Composite Index rose 25.77 points, or 0.2 percent, to 14,214.35 at 4 p.m. in Toronto. The benchmark equity gauge has advanced 3.8 percent in February and is 0.4 percent below its high from April 2011. Trading volume is 7.2 percent below the 30-day average.
“The bank earnings are front and center for a lot of investors, coming in a little better than expected,” Bob Decker, a fund manager with Aurion Capital Management Inc. who helps manage about C$6 billion ($5.39 billion), said by phone from Toronto. “Most of the debate now is how temporary is the weather-induced weakness in the economy and how much snapback there will be from that.”
TD Bank and Canadian Imperial Bank of Commerce raised their dividends after posting record first-quarter profit that beat analysts’ estimates. The two lenders join Royal Bank of Canada and Montreal-based National Bank of Canada in posting net income that topped forecasts as contributions from acquisitions helped lift earnings. Bank of Nova Scotia will report earnings March 4.
Yellen said today in the testimony on monetary policy before the Senate that the Fed is likely to maintain its strategy of gradually trimming asset purchases, even as policy makers monitor data to determine if recent weakness in the economy is temporary.
She repeated that it would take a “significant” change in the economic outlook for the Fed to alter its strategy of gradually reducing asset purchases, while adding that the reductions are “not on a preset course.”
Investors have also been watching events in Ukraine after Russia said it has begun military exercises near the Crimean border. Gunmen occupied Ukraine’s Crimea regional parliament and raised the Russian flag as lawmakers in the capital meet to approve a new cabinet after last week’s ouster of Viktor Yanukovych as leader.
“I’m sitting here, trying to get my arms around this if it’s a flash in the pan or signaling a more material threat to the western interests,” David Bianco, chief U.S. equity strategist at Deutsche Bank Securities Inc., said in an interview with Michael McKee and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance.”
Seven of 10 main industries in the S&P/TSX advanced today, with technology and phone companies rising at least 0.6 percent to pace gains. BlackBerry Ltd. climbed 1.7 percent to C$11.68, boosting its gains this week to 15 percent.
Telus Corp. increased 0.8 percent to C$38.89 to snap two days of losses and BCE Inc. added 0.7 percent to C$48.17, the highest close since May.
Financial stocks in the index increased 0.5 percent. TD Bank rose 0.8 percent to C$49.80. Canadian Imperial added 1 percent to C$91.47, the highest price since November.
Valeant Pharmaceuticals climbed 1.6 percent to a record C$164.96. The drugmaker posted cash fourth-quarter earnings of $2.15 per share, higher than analysts’ estimates of $2.06. Valeant reaffirmed its outlook for sales of as much as $8.6 billion this year, exceeding analysts’ forecasts of $8.4 billion in revenue for the period.
Catamaran plunged 11 percent to C$51.26, the biggest drop since October 2011, after the pharmacy technology services company forecast adjusted earnings of $2.04 to $2.19 a share in 2014, short of the average $2.38 projection of analysts surveyed by Bloomberg.