Canada Stocks Rise Third Day as Commodity Producers Offset Banks

  • S&P/TSX index caps best quarterly advance since June 2014
  • Canadian market will be shut on Friday, July 1 for Canada Day

Canadian stocks rose a third day, capping the best quarterly gain in two years, as turmoil in global markets eased after a tumultuous four days following the U.K. vote to leave the European Union.

The S&P/TSX Composite Index rose 0.2 percent to 14,064.54 at 4 p.m. in Toronto, reversing an earlier loss of as much as 0.5 percent. The S&P/TSX ended flat for the month of June and higher by 4.2 percent in the second quarter. Canadian markets will be closed Friday for the Canada Day holiday. Trading volume was about 6 percent higher than the 30-day average.

Raw-materials producers gained 1.1 percent as seven of 10 industries in the S&P/TSX rose. Potash Corp. of Saskatchewan Inc. rallied as much as 6.6 percent before paring gains, amid speculation of a possible takeover. Shares closed 0.9 percent higher. Lucara Diamond Corp. rebounded 3.9 percent after slumping the most in four years Wednesday when its massive 1,109-carat diamond failed to sell at auction in London.

Global stocks jumped after Bank of England Governor Mark Carney said the central bank will probably have to loosen policy within months to deal with the fallout of the Brexit vote. Boris Johnson, the high-profile “Leave” Brexit campaigner and former mayor of London, surprised observers earlier by dropping out of the race to replace U.K. Prime Minister David Cameron, casting more uncertainty on a volatile political situation in the country.

Meanwhile, Bank of Nova Scotia and Canadian Imperial Bank of Commerce slipped at least 0.9 percent as financial services stocks slipped 0.2 percent.

The Canadian benchmark has swung wildly along with global markets in the last week, posting its biggest two-day slump since February following the Brexit vote, then rallying the most since February in the following two days. The S&P/TSX trails New Zealand as the top-performing developed market in the world in 2016, according to data compiled by Bloomberg. 

Canada’s economy eked out a 0.1 percent advance in April, the first increase in three months, as the real estate boom in Toronto and Vancouver and robust consumer spending offset weakness in oil production, at least for a month. Output grew 0.1 percent, Statistics Canada said Thursday in Ottawa, matching the median forecast in a Bloomberg survey of economists. The increase follows declines of 0.2 percent in March and 0.1 percent in February.

Health-care stocks have led declines in the gauge this month with a 21 percent slide, led by struggling drugmakers Valeant Pharmaceuticals International Inc. and Concordia International Corp. Technology shares followed with a 7.1-percent drop.

Raw-materials producers have led the charge for Canada with a 51 percent gain this year, the best year-to-date performance for the industry in at least 30 years, according to data compiled by Bloomberg. Gold prices are on track for the biggest annual increase since 2010.

The gains in commodity stocks have helped Canadian shares retain their more expensive relative to U.S. peers. The S&P/TSX trades at 21.6 times earnings, about 11 percent higher than the multiple of the S&P 500.

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