Canadian Stocks Advance as Reports Show Growth in U.S. EconomyEric Lam and Aubrey Pringle
Canadian stocks rose for the third time in four days as data showing growth in the U.S. economy offset concern that a budget impasse in Washington could hurt the recovery.
Teck Resources Ltd., Canada’s largest diversified miner, gained 2.5 percent as copper rose the most in a week. Husky Energy Inc. climbed 4.1 percent after reporting “significant discoveries” in the Atlantic. Valeant Pharmaceuticals International Inc. added 0.7 percent after an analyst with Guggenheim Securities LLC initiated coverage of the stock with a buy rating. Alacer Gold Corp. dropped 6.1 percent as Credit Suisse reduced its rating on the shares and gold prices sank.
The Standard & Poor’s/TSX Composite Index rose 4.91 points, or less than 0.1 percent, to 12,841.62 at 4 p.m. in Toronto, trimming an earlier advance of as much as 0.5 percent. The benchmark Canadian equity gauge has surged 5.9 percent this quarter and is up 3.3 percent in 2013.
“The U.S. GDP and jobless claims data, those are the two reasons” for the market’s gains, said Ian Nakamoto, director of research with MacDougall MacDougall and MacTier Inc. in Toronto. The firm manages about $4 billion. “The guys in Washington will find a compromise, the question is the impact on consumer confidence. My sense is the consumer will stay on.”
The U.S. economy grew at a 2.5 percent annualized pace in the second quarter, after expanding 1.1 percent in the first, a sign the country was weathering federal budget cutbacks and higher taxes. Fewer Americans applied for unemployment benefits last week, with claims dropping by 5,000 to 305,000.
Stocks pared an earlier rally as U.S. House Speaker John Boehner said President Barack Obama can’t avoid negotiations on raising the government’s debt limit, and he doesn’t expect his chamber to pass the stopgap spending bill anticipated from the Senate. The Senate likely will not vote on the bill until this weekend, leaving the House one full workday to act before spending authority for the federal government expires on Oct. 1.
Energy shares rose 0.4 percent as a group, as six out of 10 industries in the S&P/TSX advanced. Trading volume was 18 percent lower than the 30-day average.
Husky Energy climbed 4.1 percent to C$30.26 after the Calgary-based company said it discovered oil in the Flemish Pass Basin off the Atlantic coast of Canada.
Legacy Oil & Gas Inc. rose 1.8 percent to C$6.71 and Imperial Oil Ltd. gained 1.5 percent to C$45.54 as crude prices advanced for the first time in six days.
Teck Resources rose 2.5 percent to C$29.29 as copper jumped 1.1 percent, the most in a week.
Valeant, the biggest drugmaker in Canada, increased 0.7 percent to C$106.41. Louise Chen, analyst with Guggenheim, initiated coverage of Valeant with a buy rating.
Raw-materials companies had the biggest decline among the 10 main industries in the S&P TSX, dropping 1 percent as gold for December delivery sank 0.9 percent. Of 24 companies in the S&P/TSX Gold Index, 23 fell.
Semafo Inc. tumbled 6.9 percent to C$2.42. Alacer Gold sank 6.1 percent to C$3.21 after Credit Suisse cut the stock’s rating to underperform from outperform.
BlackBerry Ltd. lost 0.6 percent to C$8.22, the lowest close since November, for a third day of declines since agreeing to sell itself on Sept. 23 to a group led by Fairfax Financial Holdings Ltd. in a tentative deal worth $9 a share or $4.7 billion. The agreement is subject to securing financing and due diligence.
The smartphone maker has slumped 24 percent in the past five days and is scheduled to officially report second-quarter earnings tomorrow. The company on Sept. 20 disclosed worse-than-estimated earnings and smartphone sales and plans to fire 4,500 workers.