Canadian Stocks Cap Best Two Days Since February as Oil Jumps

  • Energy shares lead amid speculation policy makers will move
  • CIBC slumps after agreeing to a $3.8-billion acquisition

Canadian stocks rose to cap the biggest two-day rebound since February, as energy producers rallied with crude amid speculation policy makers will move to prevent the U.K.’s European secession from hampering global growth.

The S&P/TSX Composite Index rose 1.4 percent to 14,036.74 at 4 p.m. in Toronto. The Canadian benchmark has swung back to a 2.5 percent gain in two sessions retracing some of the losses from the biggest two-day drop since February. The S&P/TSX is down 0.2 percent in June, on pace to halt a four-month rally. Trading volume was 11 percent higher than the 30-day average.

Global markets stabilized yesterday after a sharp two-day downturn in the wake of the surprise U.K. vote to leave the European Union. The S&P/TSX closed Wednesday as the top-performing developed markets in the world in 2016, after being neck-and-neck with New Zealand, according to data compiled by Bloomberg. 

Energy producers climbed 2.3 percent, leading gains as all 10 industries in the S&P/TSX rose. Crude in New York gained a second day to top $49 a barrel, as U.S. industry data showed stockpiles declined. Canadian Energy Services & Technology Corp. jumped 8.9 percent for the biggest gain.

Traders are now pricing in a greater probability of an interest rate cut at the Federal Reserve than a hike, according to data compiled by Bloomberg. EU leaders called for an orderly British withdrawal from the bloc to minimize instability. Any negotiations on Britain’s future won’t be started until it gave official notification of its departure.

Raw-materials producers have led the charge for Canada with a 49 percent gain, the best year-to-date performance for the industry in at least 30 years, according to data compiled by Bloomberg. Gold prices are up almost 25 percent this year, on track for its biggest annual increase since 2010 to halt a three-year slide. The gains in commodity stocks have helped Canadian shares retain their more expensive relative to U.S. peers. The S&P/TSX trades at 21.6 times earnings, about 13 percent higher than the multiple of the S&P 500.

Canadian Imperial Bank of Commerce dropped 2.6 percent to its lowest level since April, after agreeing to buy PrivateBancorp Inc. for $3.8 billion in a cash-and-stock deal to gain a U.S. commercial banking platform in the lender’s biggest-ever transaction.

Health-care stocks lagged the broader gauge on Wednesday, adding 0.9 percent. Valeant Pharmaceuticals International Inc. ended the day 0.7 percent higher after falling as much as 2 percent. Valeant’s Bausch + Lomb acquisition looks to be worth less than the $8.7 billion the drugmaker spent to buy the business back in 2013, according to Wells Fargo & Co. analyst David Maris.

Empire Co., owner of the Sobeys grocery store chain, slumped 11 percent to the lowest level in more than three years. The grocer reported a net loss in its fourth quarter of C$942.6 million, compared with a profit a year ago, as Sobeys same-store sales dropped 1.8 percent. Empire also reported an impairment loss of about C$1.3 billion in its western Canada business unit.

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