Canada Stocks Rise to Record as Genworth, Cenovus Earnings GainEric Lam
Canadian stocks rose to a record as companies including Genworth MI Canada Inc. and Cenovus Energy Inc. reported better-than-expected earnings and U.S. growth expanded faster than forecast in the second quarter.
MEG Energy increased 3.1 percent after boosting its year-end production targets. Cenovus Energy gained 2.4 percent as both oil and natural gas production came in ahead of estimates. Penn West Petroleum Ltd. plunged 14 percent as an accounting review may force a delay in the release of its financial results.
The Standard & Poor’s/TSX Composite Index rose 78.27 points, or 0.5 percent, to 15,524.82 at 4 p.m. in Toronto. The equity index trades at 21.3 times earnings, the highest level since 2010.
The U.S. Federal Reserve continued to trim monthly asset purchases, tapering monthly bond buying to $25 billion to stay on pace to end the program in October. The labor market still has room for improvement, while inflation has risen closer to its goal, the central bank said in its latest decision.
The U.S. economy grew at a 4 percent annualized rate, the most since the third quarter of 2013, after shrinking 2.1 percent from January through March, Commerce Department figures showed today. Gains in consumer spending and business investment boosted growth.
MEG Energy gained 3.1 percent to C$38.98, the most since April, to pace gains among energy stocks as eight of 10 industries in the S&P/TSX advanced on trading volume 23 percent higher compared with the 30-day average.
The Calgary-based oil sands developer increased its year-output forecast to 65,000 to 70,000 barrels a day from an earlier 60,000 to 65,000 barrels a day forecast with second-quarter production up 115 percent compared with a year ago.
Cenovus rallied 2.4 percent as oil sands production across its Foster Creek and Christina Lake projects averaged almost 125,000 barrels a day, up 33 percent from year-ago levels. Cash flow also jumped 37 percent on higher commodity prices.
Genworth, a private residential mortgage insurer, added 4.1 percent to C$39.25 after earnings topped estimates. The S&P/TSX Financials Index rallied 0.7 percent to a record for a seventh day of gains. The gauge has advanced 2.1 percent in that time.
Penn West sank 14 percent to C$8.57, the biggest decline since November, as the company board’s audit committee and independent advisers examine financial reports stretching back more than four years. The company said it will restate some past financial statements, which may cause it to reduce capital spending plans and cash flow assumptions for 2014.
Penn West is also starting talks with lenders because the revision may cause it to violate agreements covering its debt.