Canadian Stocks Rise to Three-Month High as Commodities Rally

  • Financial, energy shares propel benchmark gauge higher
  • Valeant lost 58% over four days, leading health-care lower

Canadian stocks rose to the highest level since December as commodity shares jumped after the weakening U.S. dollar boosted prices of resources from crude to copper.

The Standard & Poor’s/TSX Composite Index climbed 143.17 points, or 1.1 percent to 13,621.30 at 4 p.m. in Toronto, as eight of the 10 main industries rose. The benchmark gauge has gained 4.7 percent this year, rebounding from a 2 1/2 year low in January to lead gains among developed markets tracked by Bloomberg.

Canada’s resource-rich index is benefiting from a surge in prices for commodities, allowing it to post returns ahead of the U.S, Germany and U.K. Raw-materials producers have surged 36 percent after reaching a 10-a-half-year low on Jan. 19. Energy companies advanced 28 percent from a January nadir that was the lowest since 2004.

The Canadian benchmark index is now trading at 21.7 times earnings, roughly 17 percent more expensive than the valuation of the U.S. equity benchmark, the Standard and Poor’s 500 Index, data compiled by Bloomberg show.

Canadian equities got a boost from a U.S. dollar, which has fallen to the lowest level since June. That makes commodities denominated in the currency more attractive, boosting their prices. The greenback slumped after the U.S. Federal Reserve signaled that it would slow down the projected path of interest-rate increases.

Financial stocks contributed the most to the rally as Canaccord Genuity Group Inc. surged 16 percent for its one-day gain since December 2008.

Energy companies rose 1.6 percent to the highest level since November as crude prices topped $40 a barrel in New York. TransCanada Corp. advanced 2.6 percent after the company said it will buy Columbia Pipeline Group Inc. for $10.2 billion to expand its reach in the U.S. natural gas market.

Industrial companies advanced the most among 10 main industries. Bombardier Inc. rose the most in a week after a government official said the Canadian government will ultimately help the struggling jetmaker. Air Canada also gained 5.7 percent.

Health-care stocks tumbled the lowest level since November 2011, dragged lower by a decrease in Valeant Pharmaceuticals International Inc. Valeant, briefly the largest company in Canada by market capitalization last year, has lost more than three-quarters of its value from an August peak as regulators and investors have scrutinized its business practices after the Quebec-based drugmaker cut its 2016 forecast earlier this week. The company’s stock has plunged 58 percent in four days.

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