Canada Stocks Rise to 1-Month High Banks, Consumer Share Gains

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  • S&P/TSX extends rally as index closes at highest since June
  • Canadian housing starts outperform analyst estimates

Canadian stocks rose to the highest since June, joining a rally in global equities sparked by speculation economic growth will persist amid additional central-bank stimulus from Japan to Europe.

The S&P/TSX Composite Index rose 0.9 percent to 14,357.97 at 4 p.m. in Toronto, after earlier touching the highest level in almost a year. The Canadian equity benchmark extended a rally from June 27, erasing losses from the two days following the U.K.’s vote to leave the European Union. Volume was 6.8 percent lower the 30-day average.

Royal Bank of Canada and Bank of Nova Scotia increased more than 0.9 percent to lead the nation’s largest lenders higher. Canada’s housing market remains red-hot, with the surge in existing home prices in Toronto and Vancouver driving new construction in the two cities. Housing starts jumped to the highest since September, according to the Canada Mortgage & Housing Corp.

The U.S. benchmark S&P 500 closed at an all-time high, while the dollar strengthened with industrial metals extending a rally sparked by Friday’s robust jobs report. Shares are getting support from the prospect of fresh fiscal and monetary stimulus in the U.K. to contain any fallout. Japan’s prime minister vowed to take “bold” action on the economy after winning elections, while traders still don’t expect higher U.S. rates this year even as the economy shows signs of strength.

Canadian equities are neck-and-neck with New Zealand as the best-performing developed market in the world this year, led by a rally in raw-materials and energy producers. The advance has pushed valuations for the S&P/TSX to 22.1 times earnings, 12 percent higher than the S&P 500 according to data compiled by Bloomberg.

Nine of 10 main S&P/TSX groups climbed on Monday, led by consumer shares. Producers of discretionary items advanced 1.6 percent, with car-parts makers Magna International Inc. and Linamar Corp. rising at least 2.5 percent after Cormark analyst David Tyerman initiated coverage of the industry rating both companies buys. Department-store operator Hudson’s Bay Co. rose 2.9 percent for a third day of gains, after announcing it will add seven new locations in the Netherlands.

Materials shares rallied 1.1 percent, pushing gains in 2016 to 62 percent for the best year-to-date performance in at least 30 years, according to data compiled by Bloomberg. The group benefited from gains in industrial metals including nickel and copper. First Quantum Minerals Ltd. and Hudbay Minerals Inc. jumped more than 5 percent.

Bombardier Inc. climbed 4.5 percent, to the highest close in a year. Bombardier commercial chief Fred Cromer said at the Farnborough airshow he expects the company’s long-delayed C Series jet to receive approval from the Federal Aviation Administration in the next 40 days. The planemaker plans to deliver 15 C Series jets this year, and has 370 orders for the family.