Canadian Stocks Rise Most in 8 Months as Commodities Rally
Barrick, the world’s largest gold producer by sales, jumped the most since 2009 as better-than-estimated mining costs and gold output boosted first-quarter earnings. Alacer Gold Corp. and New Gold Inc. surged at least 9.8 percent as the price of the metal rallied. Teck Resources Ltd. (TCK/B) added 4.7 percent after copper rebounded from a bear market. Suncor Energy Inc., Canada’s largest oil producer, gained 2.6 percent as crude increased.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 179.49 points, or 1.5 percent, to 12,270.43 at 4 p.m. in Toronto. The benchmark equity gauge has increased 2.7 percent in the past five sessions, the longest streak of gains since January. Trading volume was in line with the 30-day average.
“It’s very heavily weighted towards the commodity space today, they’re all bouncing back,” Michael O’Brien, a fund manager with TD Asset Management, said on the phone from Toronto. He manages about C$3 billion ($3 billion). “The entire commodity complex has been sold down so viciously over the past couple weeks that people had to stop and pause for breath.”
Commodity stocks contributed most to gains in the benchmark index, as raw-material producers rose 5 percent for the biggest advance since November 2011. The S&P/TSX Materials Index has fallen 24 percent this year.
Gold advanced 1.1 percent to settle at $1,423.70 an ounce in New York, the fourth increase in five sessions, as signs of more physical purchases tempered shrinking assets in exchange- traded products. The metal has rallied 7.7 percent since touching a low of $1,321.50 on April 16.
Alacer Gold jumped 17 percent to C$2.95 and New Gold soared 9.8 percent to C$7.88. The S&P/TSX Gold Index added 6.6 percent, the most since June, as 29 of 30 members advanced.
Barrick rallied 7.6 percent to C$19.38, the biggest gain since September 2009. The miner posted adjusted first-quarter earnings of 92 cents a share, compared with the 86-cent average of 21 estimates compiled by Bloomberg.
The company’s total cash cost to produce an ounce of gold was $561, compared with $540 a year earlier and the $654 average of six estimates. The Toronto-based company is also considering suspending the $8.5 billion Pascua-Lama project on the border of Chile and Argentina.
Jamie Sokalsky, chief executive officer, said at a shareholder meeting in Toronto today Barrick is still looking for more ways to cut costs and will need to manage without the promise of higher gold prices. Barrick has plunged 44 percent this year.
Turquoise Hill Resources Ltd., which is developing the $6.6 billion Oyu Tolgoi gold project in Mongolia with parent Rio Tinto Group, soared 16 percent to C$7.
Nick Cousyn, chief operating officer with BDSec, a brokerage in Mongolia, said the Mongolian government, which has been locked in negotiations with the company over costs and environmental concerns, is now looking to do “everything possible” to ensure production starts in June.
“This is a significant about-face,” Cousyn said in a note yesterday, advising investors to “move up their time frames and buy now.”
Teck Resources, Canada’s largest diversified miner, gained 4.7 percent to C$26.80 as copper for July delivery rose 2 percent to settle at $3.165 a pound in New York. The metal fell into a bear market last week on concern slowing economies in the U.S. and China would reduce demand. Copper prices have dropped 12 percent this year.
Suncor climbed 2.6 percent to C$29.60 and Canadian Natural Resources Ltd. rallied 2.3 percent to C$29.45. Crude for June delivery jumped the most this year, adding 2.5 percent to settle at $91.43.
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