Canada Stocks Rise a Second Day as Oil Surges Above $45 a Barrelby
Crude settles at highest level since November on inventories
Benchmark equity index now near best performer in 2016
Canadian stocks climbed a second day, as energy and raw-materials producers advanced after oil closed at its highest level since November.
The benchmark Standard & Poor’s/TSX Composite Index rose 0.6 percent to 13,887.66 at 4 p.m. in Toronto. The gauge halted the longest losing streak in three weeks on Tuesday, and is neck-and-neck with New Zealand as the best-performing developed market in the world this year, with a 6.8 percent gain.
Six of the S&P/TSX’s 10 industries advanced, with utilities and raw-materials rising at least 1.3 percent. Bond yields tumbled after Federal Reserve policymakers signaled they will retain a “gradual” approach to raising interest rates even amid signs of improvement in the world’s largest economy.
Energy producers climbed 1 percent, after rallying as much as 1.8 percent. West Texas Intermediate crude futures rose 2.9 percent, settling at $45.33 a barrel in New York. The commodity briefly erased gains after data showed crude inventories rose 2 million barrels last week, ahead of a 1.75 million barrel advance projected by analysts surveyed by Bloomberg.
Cenovus Energy Inc. added 1.6 percent after reporting lower production and operating costs in the first quarter from year-ago levels, offsetting a wider operating loss than analysts expected. The oil and gas producer said the quarterly results are not indicative of potential performance for the rest of the year.
Potash Corp. of Saskatchewan Inc. added 1.9 percent before its earnings report on Thursday, while Goldcorp Inc. gained 1.8 percent as gold prices climbed for a third day.
Companies including BP Plc, Nabors Industries Ltd. and explorer Pioneer Natural Resources Co. have all said in the past 24 hours that prices above $50 will help drive a recovery in the oil industry, while The World Bank boosted its forecast for oil prices this year to an average of $41 a barrel, up from a January forecast of $37.
The resource-dominant S&P/TSX remains closely linked to moves in commodities prices, with a 17 percent rally in the benchmark equity gauge from a Jan. 20 low aligning with a rebound in crude from the lowest levels since 2003. Raw-materials and energy producers are the two top-performing industries in Canada so far this year, up more than 15 percent.
The Canadian benchmark now trades at 22.2 times earnings, about 15 percent higher than the 19.3 times earnings valuation of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.