- BMO set to kick off second-quarter earnings on Wednesday
- Gold producers slide with metal in longest slump in 6 months
Canadian stocks rose to the highest level since October, as the nation’s largest lenders joined a global rally in financial shares amid speculation the U.S. central bank is prepared to raise interest rates this summer. Miners plunged with the price of gold.
The S&P/TSX Composite Index added 0.2 percent to 13,952.85 at 4 p.m. in Toronto, pulling back after briefly climbing above 14,000 index points to reach its highest intraday level since October. The benchmark Canadian equity gauge was closed on Monday for a holiday after rising 1.2 percent last week. The index has climbed 7.3 percent this year, second most among developed-market nations tracked by Bloomberg.
Global shares jumped 1 percent today, as European and American financial firms paced gains on growing conviction the Federal Reserve will raise interest rates this summer and Britain will vote to remain in the European Union.
In Canada, Bank of Nova Scotia and Royal Bank of Canada added more than 0.9 percent to lead a 1.2 percent gain among the big banks. The nation’s largest lenders touched the highest levels in a year before Bank of Montreal kicks off the second-quarter earnings schedule on Wednesday.
The Bank of Canada is also set for its next policy decision on Wednesday, with the renewed speculation of an interest-rate increase at the Fed lowering the pressure on the central bank to cut its own lending rates to keep the currency competitive for exports. Higher U.S. rates weakens the Canadian dollar, making Canada more attractive for foreign investment.
Gold producers sank 6.6 percent to offset gains as the metal slumped a fifth day for the longest slide in six months due to Fed speculation. That dented a yearlong rally in raw-materials producers, which have been the best performer in the index with a 32 percent rally.
Commodities producers make up about a third of the S&P/TSX by market capitalization Resource prices came under pressure last week as the Fed’s April meeting minutes increased speculation an interest-rate hike could come as soon as June, driving the dollar higher.
Suncor Energy Inc. rose 2.6 percent. Energy producers added 0.5 percent, rising a second day. Eight of 10 industries in the S&P/TSX advanced on trading volume 14 percent below the 30-day average. The S&P/TSX now trades at 21.2 times earnings, about 11 percent higher than the 19.2 times valuation of the S&P 500.
Oil traded above $48 a barrel, posting the first gain in a week. All of the Canadian oil-sands facilities that workers fled last week as a wildfire spread are being allowed to prepare for restart, including sites connected to operations of Suncor, Syncrude Canada Ltd. and Cnooc Ltd.’s Nexen unit. The wildfires around Fort McMurray, Alberta forced operators to take more than 1 million barrels a day of production offline this month. U.S. data Wednesday is forecast to show crude inventories declined.