Canadian Stocks Rise Most in Two Weeks as Gold Producers Gain

Updated on
  • Canadian National Railway slips as second quarter sales drop
  • Gold price climbs ahead of U.S. Federal Reserve rate decision

TSX Movers: Intertain, Element Financial, Colliers

Canadian stocks rebounded from the biggest slump in a month with the biggest gain in two weeks amid corporate earnings and a rally in gold producers.

The S&P/TSX Composite Index added 0.4 percent to 14,550 at 4 p.m. in Toronto, the biggest gain since July 12. A rout in energy shares dragged the index lower by 0.7 percent on Monday. The benchmark is now up 12 percent in 2016, making Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX, about 11 percent higher than the S&P 500 Index.

Raw-materials producers climbed 2.2 percent as a group, the biggest contributor to gains in the S&P/TSX as six of 10 industries increased on trading volume 17 percent lower than the 30-day average. Gold prices pushed higher as the dollar fell ahead of the July interest rate decision at the Federal Reserve. Traders are pricing in only a 10 percent chance of a rate increase in July, according to data compiled by Bloomberg.

The gain in mining stocks extends a rally for the group this year to 56 percent, the best year-to-date performance for the group in at least 30 years, according to data compiled by Bloomberg. Mining and energy stocks have propelled Canada to the second-best performance among developed markets, trailing only New Zealand. It’s a far cry from last year, when the S&P/TSX was one of the worst-performing markets in the world, slumping the most since the 2008 Financial Crisis.

Canadian National Railway slipped 0.5 percent. While the nation’s largest railroad reported adjusted earnings of C$1.11 a share ahead of the C$1.06 average of estimates compiled by Bloomberg, revenue fell 9.1 percent, short of analysts’ forecasts. The company cut jobs and parked locomotives in the quarter in the face of weakening freight demand.

Canopy Growth Corp. slipped 1.2 percent, trading near the highest level in eight months in its first day of trading on the Toronto Stock Exchange after graduating from the junior Venture exchange. The marijuana grower surged 19 percent in the past two days, reversing losses for the year.

Element Financial Corp. lost 3.6 percent, the biggest decline in a month. The equipment finance firm agreed Monday to split into two companies.