Canada Stocks Rebound With Global Markets on Earnings Strength

  • Finacial sector rises to highest level since November 2014
  • Amaya falls to four-month low after ending merger talks

Canadian stocks rose with other global financial markets Tuesday, buoyed by positive earnings reports from some key multinational companies and signs that the U.S., the world’s largest economy, is strong enough to withstand a gradual pace of monetary tightening.

The S&P/TSX Composite Index rose 1.1 percent to 14,752.25 at 4 p.m. in Toronto, its highest level this month. The index shrugged off last week’s declines amid better than expected results from Goldman Sachs Group Inc. and Johnson & Johnson. The Canadian equity benchmark is up 13 percent this year, making it the top performing developed equity market in the world, ahead of the U.K. and New Zealand.

All but one of the 11 industries in the index edged higher, led by a 3.3 percent gain for raw-materials producers. Gold had its first back-to-back gains in almost a month as the dollar weakened amid interest rate speculation. Gold and silver are poised to climb by the time of the London Bullion Market Association Conference in October 2017, according to a survey of people attending this year’s gathering, which ends Tuesday. Barrick Gold Corp. and Goldcorp Inc. gained at least 2 percent to reach their highest level in two weeks. Silver Wheaton Corp. gained 3.9 percent, hitting a two week high.

Energy producers, Canada’s second largest sector, climbed 0.9 percent to the highest level since June 2015, on a rise in oil. Crude edged above $50 where prices have been hovering since OPEC’s decision to cut output last month. The S&P/TSX Energy index is 26 percent higher this year.

Financial services, which account for a third of the S&P/TSX Composite Index, gained 0.8 percent to the highest level since November 2014. The Royal Bank of Canada and Toronto-Dominion Bank climbed more than 0.8 percent, reaching record highs. Bank of Canada Governor Stephen Poloz may push back his prediction for the economy to reach full output next year and keep interest rates unchanged at an interest-rate decision Wednesday.

Valeant gained 3.2 percent, rebounding from an earlier decline after the drug maker cut ties with a mail-order pharmacy that helped sell an antidepressant it had acquired and raised prices on. The company slumped 3.6 percent on Monday to the lowest level in more than two months, after Imprimis Pharmaceuticals Inc. announced it was making a cheaper lead poisoning treatment available.

Canadian stock valuations remain 16 percent higher than their U.S. peers, with the S&P/TSX carrying a price-earnings ratio of 23.6 compared with 20.2 for the the S&P 500 Index, according to data compiled by Bloomberg.

Amaya Inc., a Canadian online gambling company, ended merger discussions with London-based William Hill Plc, thwarting one of the biggest possible deals in the betting industry, after William Hill’s largest investor, Parvus Asset Management, opposed the union. Amaya shares declined 8.3 percent to the lowest level since June.

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