Canadian Stocks Bounce From Two-Month Low as Metals Miners Rally

  • Copper has best jump in almost 3 months on strong China data
  • Eldorado climbs as Bank of America goes bullish from bearish

Canadian stocks rose, after slumping to the lowest close in two months, as raw-materials producers rebounded with industrial metals prices on strong economic data from China. Energy producers slipped with crude oil.

The S&P/TSX Composite Index gained 0.1 percent to 14,366.46 at 4 p.m. in Toronto, following a 1.7 percent slide on Tuesday. Canadian stocks are more expensive than U.S. peers, with a price-to-earnings ratio of 22.8 maintaining a 14 percent premium over the S&P 500.

Raw-materials producers added 0.5 percent, after rising as much as 2.2 percent, to pace gains among eight of the 10 main industries in the S&P/TSX. First Quantum Minerals Ltd. and Teck Resources Ltd. added at least 3 percent as copper climbed the most in almost three months to lead gains among industrial metals.

China’s broadest measure of new credit exceeded estimates in August, joining other Chinese reports this week including factory output and retail sales that also beat expectations. China is Canada’s second-largest trading partner after the U.S., according to data compiled by Bloomberg.

The rebound comes after the industry slumped in four of the prior five sessions, tumbling 6 percent in that time to lead declines in the broader benchmark. Canadian shares had joined losses across markets in a rout that’s wiped some $2 trillion off the value of equities worldwide in the past week amid fresh concern central banks are looking to tighten their monetary policy even as global growth remains tepid. 

U.S. markets also showed some signs of stabilizing Wednesday, with the S&P 500 slipping 0.1 percent to hold at the lowest in two months. Energy producers dropped, extending declines in afternoon trading as crude sank to a two-week low on speculation that a drop in U.S. inventories is only temporary.

The S&P/TSX Materials Index remains the top performer in Canada this year, fueling a rebound in the wider S&P/TSX after slumping the most since the 2008 financial crisis last year. The group is still up 47 percent and set to halt the longest yearly losing streak since 1988, led by surging gold producers as the precious metal tracks toward its best annual rally since 2010.

Eldorado Gold Corp. jumped 3.4 percent after Bank of America Corp. upgraded the stock to buy from the equivalent of sell. The company’s Greek asset outlook is better than estimated, while Chinese asset sales should greatly strengthen Eldorado’s balance sheet, the firm said in a note. Alacer Gold Corp. added 7 percent to a three-year high.

Consumer-staples companies advanced 1 percent, their best session in three weeks. Alimentation Couche-Tard Inc. rose 1.7 percent, while dairy products maker Saputo Inc. increased 1.3 percent.

Energy companies slid for the third time in four days, with Encana Corp. and Cenovus Energy Inc. losing more than 1.6 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE