Canadian stocks rallied, sending the Standard & Poor’s/TSX Composite Index briefly above its record close, as energy shares advanced on speculation the violence in Iraq will boost oil prices.
Veresen Inc. and BlackPearl Resources Inc. added 2.6 percent to lead gains among oil and natural gas companies. A measure of energy stocks in the S&P/TSX has advanced in 13 of the past 14 days and soared 20 percent this year. Consumer staples had the biggest advance among Canadian industries today, increasing 0.7 percent.
The S&P/TSX added 38.82 points, or 0.3 percent, to 15,040.43 at 4 p.m. in Toronto. The index climbed as high as 15,075.70, surpassing its previous closing record of 15,073.13 in June 2008. The equity benchmark is up 10 percent this year, the fifth-biggest advance among 24 developed markets.
“We’re seeing money rotate back into Canadian energy in a big way,” said Martin Pelletier, a fund manager at TriVest Wealth Counsel Ltd. on the phone in Calgary. “Clearly there’s momentum, the TSX is playing catch-up. A lot of the rally in the TSX has been primarily due to a strong recovery in energy.”
Mounting violence in Iraq threatens to plunge one of the world’s largest oil producers into a sectarian civil war like the one raging in neighboring Syria. Iraq’s army said it killed more than 279 rebels yesterday as the prospect of civil war in OPEC’s second-largest producer intensified with Sunni Muslim insurgents controlling territory north of Baghdad.
West Texas Intermediate crude was little changed today at $106.90 a barrel, near a nine-month high. Oil pared gains today after Bank of America Corp. said the complete halt of Iraqi output, concentrated at the opposite end of the country, is “highly unlikely.”
The S&P/TSX has rallied 99 percent from a five-year low in March 2009. The advance has been led by a more than 800 percent surge in Valeant Pharmaceuticals International Inc. Financial services companies jumped 168 percent during the bull market and the nation’s largest lenders including Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia touched records this year.
The equity benchmark trades at 20.1 times reported earnings, the highest level in three years, according to data compiled by Bloomberg.
In today’s trading, Veresen, an pipeline operator, added 2.6 percent to C$18.30. BlackPearl, which explores and develops oil and gas fields, climbed 2.6 percent to C$2.40
Valeant Pharmaceuticals dropped 1.6 percent for a 10th day of losses, its longest losing streak since 2004. Allergan Inc. said the company’s business model is unsustainable because it “relies on serial acquisitions and cost reductions.”