Investors chat as they watch a board showing stock prices at a brokerage office in Beijing, China, July 6, 2015.KIM KYUNG-HOON/Reuters
Toronto and U.S. stocks rose, with the Standard & Poor's 500 Index climbing from a four-month low, amid a rebound in Chinese equities and as optimism grew that a Greek debt crisis won't spread.
Canada's main stock index jumped 0.65 per cent shortly after the open on Thursday, with bank and resource stocks leading a broad rebound from Wednesday's hefty losses.
The Toronto Stock Exchange's S&P/TSX composite index rose 93.65 points to 14,505.72, with all 10 of the index's main sectors in positive territory.
The Canadian dollar added 0.003 of a cent to 78.77 (U.S.).
The S&P 500 climbed 1.2 per cent, or 24.02 points, to 2,070.70 in New York, after losing 1.7 percent Wednesday. The Dow Jones industrial average rose 213.5 points, or 1.2 per cent, to 17,728.88. The Nasdaq added 62.72 points, or 1.3 per cent, to 4,972.48.
"There was major concern that the situation in China could get out of control," said Christian Gattiker, head of research at Julius Baer Group in Zurich. "China and Europe are at least stabilizing and not accelerating further to the downside so this brings back some of the confidence."
Greece has until midnight Thursday to present European leaders with a plan that includes spending cuts in exchange for fresh aid. Its government extended capital controls through Monday. European leaders will meet on Sunday to decide their response to the proposals.
In China, stocks halted a rout to post the biggest gain since 2009 amid volatile trading. Regulators banned major stockholders from selling stakes, with more than half the country's listed companies suspended from trading.
Greece's financial crisis and China's equity market turmoil have diverted attention from U.S. economic data and the path of the Federal Reserve's monetary policy. The S&P 500 is down 4 per cent since its May record, and 0.6 per cent for the year.
Minutes of the U.S. Federal Reserve's June meeting, released Wednesday, signalled that officials saw the economy moving toward conditions that would support an interest-rate increase, while also expressing concern about weak consumer spending and risks from China and Greece that have since intensified.
Separately yesterday, San Francisco Fed President John Williams said he hasn't seen any data to change his view that two rate increases may be warranted this year. Williams is a voting member of the policy-setting Federal Open Market Committee this year.
The International Monetary Fund today cut its forecast for global growth this year, citing a weaker first quarter in the U.S. and warning that financial-market turbulence from China to Greece clouds the outlook. The world economy will grow 3.3 per cent in 2015, less than the 3.5 per cent pace projected in April and slower than the 3.4 per cent expansion last year, the fund said in revisions to its World Economic Outlook.
The global financial institution pegged Canadian growth this year at a thin 1.5 per cent, down from 2.2 per cent in its April forecast, while nudging its 2016 forecast up to 2.1 per cent from 2.0 per cent. It projected U.S. growth this year at 2.5 per cent, down from 3.1 per cent previously, and trimmed its 2016 forecast to 3.0 per cent from 3.1 per cent.
Data today showed more Americans than forecast filed for unemployment benefits last week, representing a pause in the pace of labour-market improvement. Applications for benefits have been below 300,000 for 18 straight weeks, the longest stretch since 2000.
Quarterly earnings will become a more prominent focus for investors in the coming weeks, after Alcoa unofficially kicked off the reporting season yesterday. JPMorgan Chase & Co. and Wells Fargo & Co. are among S&P 500 firms reporting results next week. Analysts project earnings for companies on the gauge dropped 6.5 percent in the second-quarter.