Canadian stocks rose a fourth day, extending the biggest rally since February, after the Bank of Canada cut its benchmark interest rate for a second time this year due to the impact of slumping oil on the economy.
Canadian National Railway Co. and Canadian Pacific Railway Ltd. increased more than 1.4 percent to lead industrials stocks higher. Corus Entertainment Inc. tumbled 9 percent after reporting third-quarter earnings and revenue short of analysts’ estimates.
The Standard & Poor’s/TSX Composite Index rose 62.88 points, or 0.4 percent, to 14,662.28 at 4 p.m. in Toronto. The benchmark equity gauge has gained 2.7 percent in four days, the most since February. The rally has pushed the gauge to a 0.2 percent gain this year.
“This is going to give a nice boost to stocks,” said Geoffrey Pazzanese, a global equity fund manager at Federated Investors Inc. on the phone from New York. His firm manages $355.8 billion in assets, and exited Canada completely in February. “It will help the domestic economy, the currency might help operationally if you’re selling in U.S. dollars.”
Canadian Pacific Railway rose 1.4 percent and Canadian National Railway added 2.6 percent as industrials stocks rallied 1.2 percent as a group. Eight of 10 industries increased on trading volume in line with the 30-day average today.
Alimentation Couche-Tard Inc. climbed 4 percent, extending a record, to lead a 2 percent increase in consumer-staples stocks.
The threat of a contracting economy prompted Bank of Canada Governor Stephen Poloz to cut his policy interest rate for the second time this year, to 0.5 percent from 0.75 percent.
The Canadian economy probably “contracted modestly” in the first half, policy makers said, without calling it a recession, which is typically defined as two straight quarters of negative growth.
Royal Bank of Canada rose 0.5 percent while Canadian Western Bank dropped 3.3 percent. Toronto-Dominion Bank, the second-largest lender, rose 1.1 percent. The lender cut its prime lending rate 10 basis points to 2.75 percent in response to the central bank’s decision.