Canadian Stocks Rise to Record Amid Optimism on Interest Rates

Canadian stocks rose to a record amid optimism that central banks worldwide will keep interest rates low. Tim Hortons Inc. surged on merger talks.

Consumer-discretionary stocks rallied the most in the benchmark index as Tim Hortons soared 19 percent on discussions of a merger with Burger King Worldwide Inc. First Quantum Minerals Ltd. climbed 2.2 percent as copper rallied to a two-week high. Semafo Inc. and B2Gold Corp. dropped more than 3.7 percent as gold futures declined.

The S&P/TSX advanced 63.19 points, or 0.4 percent, to a record 15,598.74 at 4 p.m. in Toronto. The benchmark equity gauge climbed 1.5 percent last week for the best gain since June.

Trading in S&P/TSX stocks was 29 percent below the 30-day average. Canadian stocks have surged 15 percent this year, making the S&P/TSX the second-best performer among developed equity markets behind Denmark.

Global central bankers last week led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before their economies can weather higher interest rates. Comments by Mario Draghi fanned speculation the European Central Bank is closer to quantitative easing.

Tim Hortons

Bank of Canada Governor Stephen Poloz said in an interview Aug. 22 that persistent slack in the country’s labor market and a tendency toward part-time job creation has restrained income growth in the world’s 11th-largest economy. Economists surveyed by Bloomberg forecast policy makers to keep the benchmark rate at 1 percent, where it’s been for almost four years, until the third quarter of next year.

Seven of 10 industries in the S&P/TSX advanced. Consumer-discretionary shares rallied 2 percent, while industrials gained 0.6 percent.

Tim Hortons soared 19 percent to C$82.03. Burger King would create the world’s third-largest fast-food chain by merging with Canada’s bigger seller of coffee and doughnuts, the companies said in a statement.

The combined business would have about $22 billion in sales and more than 18,000 restaurants in 100 countries, according to the statement. The deal is subject to negotiation, and Burger King and Tim Hortons don’t plan to comment further until an agreement is reached or discussions are discontinued.

First Quantum Minerals advanced 2.2 percent to C$25.05 to a three-week high as copper futures rose 0.4 percent to settle at $3.237 a pound in New York.

The S&P/TSX Gold Index fell 1.5 percent to a one-month low as gold futures slipped 0.1 percent. Semafo slumped 4.1 percent to C$4.87, while B2Gold dropped 3.7 percent to C$2.63. Alamos Gold Inc. fell 2.2 percent to C$9.71.

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