A Toronto Stock Exchange (TSX) logo is seen in Toronto in this file photo.© Mark Blinch / Reuters
Canadian stocks rose for a second consecutive session on Tuesday as easing concerns about the global economy propped up financial and consumer companies.
The Standard & Poor's/TSX Composite Index rose 1.4 per cent, or 173.74 points, to 12,554.98 in Toronto. A two-day advance has trimmed the benchmark gauge's decline in 2016 to almost 3.5 per cent, making it the second best-performing developed market in the world this year, behind only New Zealand. Canadian shares joined a rally in equities worldwide Tuesday after a report tracking a credit measure in China surged to a record.
Financial shares helped contribute to the S&P/TSX's advance. Both Royal Bank of Canada and Toronto-Dominion Bank gained 2.1 per cent.
Element Financial Corp. climbed 6.3 per cent after the company announced plan to split into two public companies: Element Fleet Management and Element Commercial Asset Management. Aviation finance will be discontinued, according to a statement Monday.
Consumer stocks discretionary rose 2.4 per cent. Restaurant Brands International Inc. led gains, adding 5.9 per cent after the owner of Burger King and Tim Hortons reported fourth-quarter profits that topped analysts' estimates.
Bombardier Inc. added 11.1 per cent after the company said it expects to get certification for its new jet from U.S. and Europe in the first half of this year. Shares crossed below $1 in late January and are down 68 percent over the past year.
The resource-rich S&P/TSX is closely linked to commodity prices with raw-materials and energy producers accounting for almost 30 per cent of the overall gauge. Oil prices retreated Monday after a pledge by Russia and Saudi Arabia to freeze output failed to convince traders the move was enough to tackle the global crude surplus. Energy companies in Canada were little changed. Penn West Petroleum Ltd. climbed 1.8 per cent, while Athabasca Oil Corp. sank 8 per cent.
Raw-material producers was the only of the index's 10 main groups to fall, as gold in the spot market fluctuated. Goldcorp. slumped 5.3 per cent.
U.S. stocks also rose, with the Standard & Poor's 500 Index posting the best two-day gain in more than five months, despite weakness in oil prices as beaten-down banks, technology and retailer shares led an advance.
The S&P 500 increased 1.6 per cent to 1,895.40 in New York, bringing the gauge's climb since Thursday's close to 3.6 per cent.
The Dow Jones industrial average rose 220.72 points, or 1.38 per cent, to 16,194.56, while the Nasdaq Composite added 98.44 points, or 2.27 per cent, to 4,435.96.
"What we're seeing here are the U.S. markets trying to catch up with the rally that the rest of the world saw yesterday," said Peter Jankovskis, who helps oversee $1.9-billion as co-chief investment officer of Lisle, Ill.-based OakBrook Investments. "Oil is still important, but I think the larger focus has now switched to financial stocks. People turned their focus on the impact of negative rates spreading around the world, and the impact that might have on banks' profits."
Bank shares continued a rebound Tuesday from the lowest levels in nearly three years, marking the steepest back-to-back increase since 2009. Investors have sold off lenders this year amid concerns that persistently low interest rates will weigh on profits and the collapse in oil prices could increase credit risk. The Nasdaq Composite pulled further away from a bear market, after sliding last week to within 1 per cent of a 20-per-cent drop from its record set in July.
Investors lowered equity holdings, cutting banks at the fastest rate in almost 10 years, while raising cash to 5.6 per cent of their portfolios, the highest level since November 2001, according to Bank of America Corp.'s February survey of global fund managers. The cash level represents an "unambiguous" buy signal, strategists led by Michael Hartnett, wrote in a note Tuesday.
The S&P 500 on Friday capped a second consecutive weekly decline amid increased concern that central-bank efforts to support growth worldwide are losing potency. The benchmark is down 11 percent from an all-time high set in May.
There was evidence that investors were searching for bargains today as three of the four best performers among the S&P 500's 10 main industries -- consumer discretionary, financial and technology shares -- are among the most battered year to date, losing more than 8.8 percent.
"The areas that are bouncing the hardest today are financials, particularly the banks, and discretionary stocks," James Abate, who helps oversee $1-billion as chief investment officer at Centre Funds in New York, said. "It's a trade that says we're not falling into a recession immediately, combined with the fact that we're already down 10 percent year to date."
Oil dropped on speculation that a pledge by Saudi Arabia and Russia to freeze production at January levels won't succeed in tackling the global oil surplus.
Crude fell 1.4 per cent in New York. The agreement depends on other producers following suit, Qatar's Energy Minister Mohammed bin Saleh al-Sada said in Doha Tuesday. The pact won't be meaningful unless Iran and Iraq, which have been raising output, cooperate, Commerzbank AG said. Saudi Arabia's Ali al- Naimisaid the freeze could be followed by other steps to improve the market.
"The market is reacting rationally," said Mike Wittner, head of oil-market research in New York at Societe Generale SA. "There's been a lot of chatter about a possible cut over the last month, so the reaction has got to be: Is this the best we can do? I struggle to find anything bullish in this announcement."
Venezuela has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between OPEC members and other suppliers in an attempt to reach an agreement to balance the market. Brent crude is still down about 14 per cent this year amid the outlook for increased Iranian exports. BP Plc predicts the market will remain "tough and choppy" in the first half as it contends with a surplus of 1 million barrels a day.
West Texas Intermediate oil for March delivery fell 40 cents to close at $29.04 a barrel on the New York Mercantile Exchange. There was no settlement Monday because of the U.S. Presidents Day holiday. Trades were booked Tuesday for settlement purposes. Total volume traded was 80 per cent above the 100-day average.
Brent for April settlement slipped $1.21, or 3.6 per cent, to $32.18 a barrel on the ICE Futures Europe exchange. The European benchmark oil closed at a $1.21 premium to April WTI.