Canadian Stocks Rise to 19-Month High as BoC Holds Rates SteadyEric Lam
Canadian stocks rose to a 19-month high as the central bank said its interest-rate policy is likely to be unchanged for some time amid slowing growth in the world’s 11th-largest economy.
Trilogy Energy Corp. surged 13 percent after it boosted cash flow and oil reserves in the fourth quarter and an analyst raised the energy company’s stock rating. BlackBerry climbed 7.4 percent after its chief executive officer said the latest line of smartphones was luring customers from rivals. Canadian Pacific Railway Ltd. rose to a record as the company said it was ahead of schedule with a job-reduction plan.
The Standard & Poor’s/TSX Composite Index increased 95.92 points, or 0.8 percent, to 12,831.96 at 4 p.m. in Toronto, the highest close since July 2011. The S&P/TSX has gained 3.2 percent this year.
“The rising market today is a combination of the follow-through from the strong markets of the past few days and the fact that interest rates appear to be unchanged for a period of time,” said Anish Chopra, managing director and fund manager with TD Asset Management Ltd., from Toronto. His firm oversees about C$204 billion ($198 billion).
The Bank of Canada kept the benchmark rate on overnight loans between commercial banks at 1 percent. It said inflation will “remain low in the near term” in an economy with “material excess capacity.”
Statistics Canada said March 1 that output expanded at a 0.6 percent annualized pace in the fourth quarter, slower than Bank of Canada Governor Mark Carney’s 1 percent forecast from January. The 0.5 percent inflation rate seen in that month remains well below his 2 percent target.
“The Canadian economy isn’t growing as fast as the U.S.,” Chopra said. “So you’re seeing the implications of that in how the Bank of Canada is positioning its rates, that it could stay at 1 percent for quite a while.”
Global stocks rose to the highest in more than 4 1/2 years today, and the Dow Jones Industrial Average extended its record as a private report showed faster-than-forecast U.S. jobs growth and the Federal Reserve said the economy is growing.
Raw-materials stocks contributed most to gains in the S&P/TSX, rising 3.4 percent as a group. Eight of 10 index groups advanced. Trading volume was in line with the 30-day average.
Barrick Gold Corp., the world’s largest gold producer, rose 4.4 percent to C$30.61. Goldcorp Inc. climbed 4.7 percent to C$34.44. Gold for April delivery settled unchanged at $1,574.90 an ounce in New York. The metal rose 0.6 percent to $1,583.60 in electronic trading at 4:36 p.m., after the U.S. central bank said the economy grew at a modest to moderate rate across most of the country.
Trilogy Energy jumped C$3.50 to C$29.65 for its biggest percentage gain since February 2011. Funds flow from operations jumped 71 percent in the fourth quarter and reserves grew by the equivalent of 19.2 million barrels of oil, the company said yesterday.
Gordon Currie, senior analyst with Salman Partners, raised the stock to buy from hold and said the oil and gas producer could afford to increase its dividend. “Trilogy has a relatively low dividend compared to peer group companies,” he said in a client note. Trilogy’s dividend yield is about 1.4 percent, compared with 3.2 percent for the S&P/TSX Energy Index.
BlackBerry, formerly known as Research In Motion Ltd., increased 95 Canadian cents to C$13.85 after CEO Thorsten Heins, in an interview with the Spanish newspaper Expansion, said he was “a little surprised” that the BlackBerry Z10 smartphone was attracting customers from other platforms.
“Operators are supporting us a lot because they want BlackBerry 10 to be an alternative to Samsung and Apple,” Heins said in an interview with the newspaper during the Mobile World Congress in Barcelona last week.
Canadian Pacific rose 38 Canadian cents to C$129.80 after Chief Executive Officer Hunter Harrison, speaking today at a transportation conference in New York, said the company has already cut more than 3,000 jobs and is ahead of its schedule to eliminate more than one-fifth of its workforce by 2016.
Torstar Corp. tumbled 12 percent to C$7, its largest daily drop in four years, after the publisher of the Toronto Star newspaper reported fourth-quarter adjusted earnings of 49 Canadian cents a share. The result fell short of the average estimate of 53 cents, according to a Bloomberg survey of eight analysts.