Canadian Stocks Erase Loss as Royal Bank, TD Bank Rally; Cenovus Declines
Canadian stocks rose, as financial shares rallied after Citigroup Inc.’s first quarter profit beat estimates and as two people with knowledge of the vote said the U.S. Securities and Exchange Commission didn’t unanimously approve pursuing a case against Goldman Sachs Group Inc.
Toronto-Dominion Bank, the nation’s second-largest lender, rose 1.1 percent after saying it may make more acquisitions in the U.S. Royal Bank of Canada, the country’s biggest bank, gained 1 percent. Cenovus Energy Inc. fell 1.9 percent on lower oil prices as commodity producers declined on concern that China’s steps to cool property prices will crimp demand.
The Standard & Poor’s/TSX Composite Index rose 32.31 points, or 0.3 percent, to 12,102.97 at 4:22 p.m. in Toronto, after falling as much as 1 percent earlier. A gauge of financial stocks rose 0.8 percent, erasing a loss of 0.6 percent.
“Financials turned around on the back of the numbers of from Citigroup,” said Barry Schwartz, money manager at Baskin Financial Services in Toronto, which oversees C$350 million ($345 million.) Investors who had sold financial stocks after U.S. regulators sued Goldman on April 17, switched to buying, after Citigroup’s results signaled a trend toward lower loan loss provisions that will benefit Canadian banks when they report earnings, Schwartz said.
Citigroup’s first-quarter net income of $4.43 billion followed a loss of $7.58 billion in the fourth quarter and a profit of $1.59 billion in the first three months of 2009 Adjusted per-share earnings were 14 cents, the New York-based company said today in a statement. Analysts in a Bloomberg survey estimated the company would break even.
Toronto-Dominion rose 1.1 percent to C$76.97 after Chief Executive Officer Edmund Clark said it will consider other Federal Deposit Insurance Corp.-assisted acquisitions in Florida after agreeing to buy the assets of three banks in the state.
“That’s a terrific strategy,” said Bob Decker, a money manager at Aurion Capital in Toronto, which manages C$4.2 billion. Toronto-Dominion will “use the financial duress of Florida banking system” to build its business in the U.S. southeast, he said.
Commodity producers fell as China took additional steps to cool its economy. China told banks April 17 to stop loans for third-home purchases and suspend lending to certain buyers, adding to orders earlier this year to set aside more reserves and raise mortgage rates.
Teck Resources Ltd., Canada’s biggest base metals producer, retreated 0.6 percent to C$42.42 after copper fell to a three- week low.
“China was the lead dog in the chase on the way out of the crisis,” Decker said. “It’s an important lead indicator. They are the dominant component of demand for commodities.”
The Canadian equity benchmark had climbed 8.8 percent from Feb. 5 to April 15 as commodities rallied on speculation that growth in emerging markets would spark demand. Energy and material producers account for 45 percent of Canadian stocks by value.
Cenovus Energy Inc. led declines among energy shares, falling 1.9 percent to C$28.62, as crude oil for May delivery dropped $1.83, or 2.2 percent, to $81.45 in New York. Talisman Energy Inc. slid 0.4 percent to C$16.67.
Eastern Platinum Ltd., which produces precious metals in South Africa, fell 4.6 percent, the most in the S&P/TSX, to C$1.46. The Vancouver-based company said April 16 that production decreased 10 percent in the first quarter.
Canfor Corp. gained 2.5 percent to C$10.15. Lumber surged the maximum allowed on the Chicago Mercantile Exchange on April 16, touching the highest price in almost four years, after government reports on housing revived optimism that demand for wood will rebound.
To contact the reporters on this story: Stephen Kleege in New York at firstname.lastname@example.org