Canada Stocks Rise, Reverse Loss as Couche-Tard Jumps to Record

  • Oil, metals prices retreat as dollar rises on Fed hike talk
  • Couche-Tard, Parkland surge to records on $4 billion CST deal

Canadian stocks rose, rebounding from early declines to halt a four-day slide, as advances in consumer and health-care companies overcame losses in natural-resource producers.

The S&P/TSX Composite Index rose 0.4 percent to 14,748.19 at 4 p.m. in Toronto, after the benchmark fell as much as 0.5 percent. A rising U.S. dollar weighed on commodities, with the currency climbing after a Federal Reserve official signaled interest rates may rise this year. Trading volume was 10 percent lower than the 30-day average.

Consumer staples and health-care stocks jumped on corporate news, driving the S&P/TSX higher. Alimentation Couche-Tard Inc. climbed 7.5 percent to a record after the convenience store operator agreed to buy San Antonio-based CST Brands in a cash deal valued at almost $4 billion, its biggest-ever acquisition to expand its foothold in Texas and eastern Canada.

In a separate transaction Couche-Tard has also agreed to sell the majority of CST’s Canadian business and assets to Parkland Fuel Corp. for C$965 million. Parkland shares jumped 16 percent to an all-time high.

Valeant Pharmaceuticals International Inc. rallied 9.7 percent to its highest close in three months, after hiring Paul Herendeen as its new chief financial officer in the latest shakeup at the drugmaker attempting to turn around its business. It’s been a volatile August for Valeant, which has seen its wide swings in its shares amid a lawsuit from T. Rowe Price Group Inc., investigations from U.S. prosecutors and regulators, as well as an earnings outlook that cheered investors and resulted in several analyst upgrades.

Raw-materials and energy producers were the only two of the S&P/TSX’s 10 main industries to end the day lower. Crude futures dropped 3 percent in New York to halt the longest run of gains in four years on concerns of increased supplies from Iraq and Nigeria. Gold fell a second day while copper led industrial metals lower on a growing chorus of hawkish comments from Fed officials.

Crescent Point Energy Corp. and Cenovus Energy Inc. fell more than 1.3 percent, while Goldcorp Inc. lost 1.4 percent. Raw-materials producers remain the biggest contributors to the rally in Canadian equities in 2016, surging 57 percent as the top gainers among 10 industries in the S&P/TSX. It’s the best year-to-date performance for the category in at least 20 years, according to data compiled by Bloomberg. Energy producers have gained 22 percent in the same period.

That’s boosted the Canadian equity benchmark to a 13 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 23.5 for the S&P/TSX, opening up a 15 percent premium over the S&P 500 Index.

U.S. stocks slipped and the dollar strengthened on rising speculation of an rate hike before the end of the year. Fed Vice Chairman Stanley Fischer said Sunday the U.S. economy is close to meeting the central bank’s goals and growth will pick up. Fischer’s remarks follow similar comments last week from policy makers Dennis Lockhart and William Dudley. Traders are now pricing in a 51 percent chance of a rate increase in December.

Before it's here, it's on the Bloomberg Terminal.