Canadian Stocks Climb on Reports of Profits, Europe Debt Plan
Canadian stocks rose for a third day as energy and financial shares rallied on better-than-forecast U.S. and Canadian earnings and speculation that Europe is making progress toward addressing the Greek debt crisis.
Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, advanced 1.4 percent as Greek bond yields plunged the most in a month. Savanna Energy Services Corp. (SVY) surged 8.9 percent after an analyst raised his rating on the stock. Pharmacy-benefits manager SXC Health Solutions Corp. (SXC) rallied 4.7 percent after Express Scripts Inc. agreed to buy Medco Health Solutions Inc. for $29.1 billion.
The Standard & Poor’s/TSX Composite Index climbed 93.47 points, or 0.7 percent, the most this month, to 13,434.30. The index has returned 1.2 percent this year, including dividends.
“The TSX is only up a little bit for the year,” Blair Falconer, a Toronto-based portfolio manager for HSBC Holdings Plc who manages C$800 million ($847 million), said in a telephone interview. “Given the kind of strong earnings we’ve had over the last little while, you’d expect the market to have done a little bit better. We’re expecting to see better numbers from the TSX.”
Since July 11, 86 percent of the S&P 500 companies reporting earnings have beaten the average analyst estimate, while six of the seven S&P/TSX companies to report have exceeded forecasts.
The Canadian stock benchmark lost 4 percent in the three months ended yesterday as investors speculated the European debt crisis will spread beyond Greece and U.S. lawmakers failed to reach a deal to raise the country’s debt ceiling. Oil futures tumbled 12 percent during the period, leading the S&P/TSX Energy Index to a 5.6 percent decline without dividends.
Bond yields in the most-heavily indebted countries that use the euro fell today as officials said Euro-area leaders may accept a temporary Greek default and widen the scope of their rescue fund as they intensify efforts to resolve the 21-month sovereign debt crisis.
Thirty-eight of 43 S&P/TSX financial companies gained. Toronto-Dominion Bank (TD), Canada’s second-largest lender by assets, rose 1.3 percent to C$80.22. Manulife advanced 1.4 percent to C$16.11. Brookfield Asset Management Inc. (BAM/A), Canada’s largest real-estate company, increased 1.5 percent to C$30.98.
Oil, Gas Producers
Energy companies climbed as oil futures rose. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, gained 1.7 percent to C$41.36. Athabasca Oil Sands Corp. (ATH), PetroChina Co.’s partner in oil-sands development, advanced for a fifth day, rallying 2.4 percent to C$15.83.
Savanna Energy Services Corp., which provides oil and gas servicing in Canada and parts of the U.S., soared 8.9 percent to C$10.05 for the biggest gain in the S&P/TSX. Canadian Imperial Bank of Commerce raised the shares to “sector outperform” from “sector perform.”
SXC surged 4.7 percent to C$61.01 after Express Scripts agreed to buy Medco Health Solutions to create the largest U.S. pharmacy-benefits manager. “Potential contract disruption” from the acquisition may create business opportunities for SXC, Arthur I. Henderson and Brian Tanquilut, analysts at Jefferies Group Inc., said in a note to clients.
Canadian National Railway Co. (CNR), the country’s largest railroad, climbed 2.1 percent to C$75.07 after Union Pacific, the biggest U.S. rail carrier by revenue, reported sales and adjusted earnings that surpassed the average analyst estimate.
BlackBerry maker Research In Motion Ltd. (RIM) rose for the first time in seven days, gaining 4.4 percent to C$26.36 after saying the U.S. government has approved its PlayBook tablet for official use. The shares fell to the lowest since August 2006 yesterday.
Exploration Orbite VSPA Inc. (ORT/A), which is developing an alumina project in Quebec and extraction technology, jumped 8.8 percent to C$3.57 after saying it extracted alumina from samples of bauxite from Guinea.
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