Canadian stocks rose to a three-week high, as commodities producers rallied after unrest in Egypt sent crude higher and gold surged amid concern the U.S. Federal Reserve will curb stimulus measures.
Eldorado Gold Corp. (ELD) and Iamgold Corp. soared more than 7.7 percent as gold rose to an eight-week high. Bankers Petroleum Ltd. jumped 5.7 percent to pace gains among energy producers. Brookfield Asset Management Inc. (BAM/A) declined 3.4 percent after existing home sales in July recorded their smallest gain in five months. Valeant Pharmaceuticals International Inc. slid 1.1 percent, giving health-care stocks the biggest drop in the benchmark index.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 65.22 points, or 0.5 percent, to 12,704.52 at 4 p.m. in Toronto, the highest since July 23. Trading volume was 31 percent higher than the 30-day average at this time of the day.
“The tapering view has been reinforced today,” said Andrew Pyle, a fund manager with ScotiaMcLeod Inc. in Peterborough, Ontario. He manages about C$210 million ($204 million). “Gold is picking up because of the volatility in bonds and stocks, and then you also have what’s going on in Egypt, which is a very significant development given the extent of what’s happening. Any type of volatility in that region tends to support crude prices due to supply disruptions.”
The S&P/TSX erased earlier losses of as much as 0.6 percent, initially following U.S. and global equities lower amid concern the Fed will withdraw stimulus this fall after data showed U.S. jobless claims dropped to the lowest level in almost six years.
Gold, OilThe central bank has said it will consider reducing its monthly bond purchases as the economy shows signs of improvement. The tapering concerns drove U.S. Treasury yields to two-year highs and gave U.S. equities the worst drop since June. Monetary support has bolstered equities around the world.
The tumble in global stocks -- only four of 24 developed markets rose today -- boosted demand for gold as an alternative investment. The metal traded above $1,350 for the first time since June 20, reversing an earlier decline of as much as 1.2 percent. Oil rose for a fifth day as unrest in Egypt bolstered concern supplies could be cut. Commodity stocks account for nearly 39 percent of S&P/TSX.
Materials producers rallied 3.8 percent and energy companies added 0.8 percent, as four out of 10 groups in the benchmark index advanced.
Eldorado Gold soared 7.7 percent to C$9.50 and Iamgold climbed 11 percent to C$6.66. Centerra Gold jumped 11 percent to C$6.20, extending its winning streak to seven days, the longest since May 2012.
Suncor Energy Inc. (SU) advanced 3.5 percent to C$34.97, the highest since January, after Warren Buffett’s Berkshire Hathaway Inc. reported a stake in the energy producer.
Buffett’s firm owned 17.8 million Suncor shares on June 30, valued at more than $500 million, Berkshire said today in a regulatory filing.
Five energy stocks rose for every one that fell, led by a 5.7 percent surge in Bankers Petroleum to C$3.32.
Telus Corp. rallied 4.8 percent to C$32.21 and Rogers Communications Inc. gained 5 percent to C$42.45 to pace gains among phone stocks. The Globe and Mail reported that Verizon Communications Inc. has delayed possible takeover bids for smaller wireless carriers Wind Mobile and Mobilicity, without naming sources.
Financial stocks lost 0.6 percent, as data showed existing home sales in Canada rose 0.2 percent last month, down from a 3.3 percent pace in June and 3.6 percent in May. Toronto-Dominion Bank (TD), Canada’s second-largest lender, slid 0.6 percent to C$86.75
Brookfield Asset Management dropped 3.4 percent to C$37.01 and Canadian Apartment Properties Real Estate Investment Trust retreated 0.6 percent to C$20.68 to pace declines among real-estate stocks.
Valeant Pharmaceuticals slid 1.1 percent to C$106.12, extending a two-day decline after closing at a record Aug. 13. The drop helped drag health-care stocks 1.4 percent lower as a group.