Canadian Stocks Rise Most in Three Weeks as Gold Producers Rally

  • Canadian Western Bank edges higher on narrow earnings beat
  • Dollarama reaches record as profit, sales exceed expectations

Canadian stocks rose the most in three weeks, rebounding from the lowest level in almost a month, as raw-materials producers rallied with the price of precious metals as investors cut the odds for higher U.S. interest rates.

The S&P/TSX Composite Index rose 0.6 percent to 14,683.91 at 4 p.m. in Toronto, reversing a loss of as much as 0.2 percent. The benchmark gauge closed yesterday at a four-week low, but managed to eke out a 0.1 percent increase in August. Trading volume was 25 percent higher than the 30-day average on Thursday.

Raw-materials producers added 2.4 percent, for the strongest rally since July. The group surged as the dollar erased gains after a weaker-than-forecast reading on U.S. manufacturing in August. That damped wagers on a Federal Reserve interest-rate increase this month. Gold edged higher after capping the first August decline in seven years, ahead of Friday’s U.S. jobs report. Barrick Gold Corp. rallied 4.6 percent, and Silver Wheaton Corp. added 3.3 percent.

Dollarama Inc. added 4.4 percent, closing at a record after second-quarter earnings and revenue topped estimates, driving a 0.9 percent gain in consumer discretionary stocks. The dollar-store retailer maintained plans to open 60 to 70 net new stores by the fiscal year-end.

Meanwhile, Canadian Western Bank ended 0.3 percent higher after a whipsaw day, reporting a narrow beat in adjusted earnings. Chief Executive Chris Fowler said in a statement the company will continue to “conservatively manage” exposure to the oil and gas industry in Alberta. All six of Canada’s largest lenders beat analysts’ estimates in the current reporting period. Financial stocks added 0.1 percent Thursday, clawing back earlier losses.

Energy producers rose 0.2 percent, even as oil tumbled, on track for the biggest weekly decline in eight months. Government data Wednesday showed crude supplies at the highest seasonal level in more than 20 years. Crude futures in New York have slumped 9.3 percent in four days and sank below $44 a barrel.

The rally in the commodity sector has boosted the Canadian equity benchmark to an almost 13 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. Canadian stocks are more expensive than their U.S. peers, with a price-earnings ratio of 23.3 for the S&P/TSX, opening up a 14 percent premium over the S&P 500 Index.

The yearlong rally in Canadian equities fizzled in August, capping the narrowest one-month climb since June 2009 as gains in raw-materials producers faltered with gold. The drop cut the group’s rally this year to 49 percent, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 20 percent in 2016, on pace for the strongest in seven years.

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