Canada’s main stock index rallied on Friday ahead of the Victoria Day holiday long weekend, propelled in part by gains in banking stocks and oil and gas companies.
Canadian economic data showed the country’s annual inflation rate held steady in April, while March retail sales climbed more than expected, suggesting consumer spending was holding up.
The five most influential movers on the index were all banking issues, with Toronto Dominion Bank topping the list, rising 0.9 per cent to $63.10.
Home Capital Group Inc, which has been struggling to finance its assets after Canada’s biggest securities regulator accused the company of making misleading statements to investors, rose 6 per cent to $9.40 after it reported a rise in its savings deposit balances.
The overall financial services group, which accounts for about a third of the index’s weight, gained 0.7 per cent.
At 11:13 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index rose 140.57 points, or 0.91 percent, to 15,417.77, recouping some of the week’s sharp losses. The index was still headed for an overall loss on the week, however.
Healthcare fell 0.4 per cent, making it the only sector out of the index’s 10 main ones to fall into negative territory.
The energy group climbed 1.8 per cent, with Canadian Natural Resources Ltd advancing 1.2 per cent to $41.92. Oil and gas producers were partly bolstered by higher oil prices, which were headed towards its second week of gains. U.S. crude prices were up.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1 per cent.
Potash Corp advanced 3 per cent to $22.27 as the fertilizer producer’s chief executive said a change in SQM’s governance that gave Potash greater influence, did not reflect its intent to raise its stake in the Chilean lithium producer.
Canadian National Railway Co rose 1.2 per cent to $101.09, while the overall industrials sector rose 0.8 per cent.
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U.S. stocks were higher late Friday morning as a set of strong corporate earnings lifted investor spirits in a week dominated by uncertainty surrounding Donald Trump’s presidency.
However, Wall Street’s major indexes were on track for their worst weekly declines since mid-April following reports that Trump had tried to interfere in a federal investigation.
Investors were concerned that the uncertainty in Washington could hinder Trump’s promise of fiscal stimulus, a bet on which Wall Street has rallied to record highs.
Strong quarterly earnings from companies, including Autodesk and Deere & Co, boosted the market. Autodesk was among the biggest percentage gainers on the S&P and the Nasdaq after the software maker reported better-than-expected quarterly revenue.
Deere hit an all-time high of $122.24 after the farm and construction equipment maker reported a quarterly profit that beat expectations.
The news lifted Caterpillar’s shares by 2 per cent, making it the top stock on the Dow.
“We think the Trump trade and the reflation trade have unwound almost entirely post election, and the market is relying on recovery in earnings and strong fundamentals,” said Matt Jones, U.S. head of equity strategy, J.P. Morgan Private Bank.
Of the 452 S&P 500 companies that have released results so far, about 75 percent have topped earnings expectations. In a typical quarter, about 64 percent beat estimates, according to Thomson Reuters I/B/E/S.
“You (also) didn’t have a lot of news out of Washington, which is helping calm some of the anxiety,” Mr. Jones said.
The Dow Jones Industrial Average was up 122.39 points, or 0.59 per cent, at 20,785.41, the S&P 500 was up 17.5 points, or 0.74 percent, at 2,383.22 and the Nasdaq Composite was up 43.57 points, or 0.72 per cent, at 6,098.70.
All the 11 major S&P 500 sectors were higher, with industrials, materials and energy gaining more than 1 per cent.
Wal-Mart was up 1.7 per cent at $78.86 after BMO upgraded the big-box retailer’s stock to “market perform” from “underperform” following higher-than-expected quarterly sales at established U.S. stores.
Oil prices were heading on Friday for a second week of gains on growing expectations that big crude exporters will extend output cuts to curb a persistent glut in inventories.
Brent crude was up 77 cents at $53.28, its highest since April 21, while U.S. benchmark crude oil was up 67 cents at $50.02.
Since the start of March, the Brent price has swung from more than $56 a barrel to less than $47 as opinion swayed over whether cuts by the Organization of the Petroleum Exporting Countries and other producers will offset rising U.S. output.
“The battle between bulls and bears is raging on oil,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
“On the one hand, you have traders who worry about the efficacy of OPEC’s oil cuts on inventory levels. On the other, there are those who are focused on the real drawdowns that have started to occur in U.S. oil stocks over the past month or so,” he said.
Saudi Arabia and non-OPEC Russia have said they see a need for an extension to output reductions. The initial agreement between OPEC and other producers was for cuts of 1.8 million barrels per day (bpd) to run through the first half of 2017.
OPEC and other producers are due to discuss an extension during an OPEC meeting on Thursday.
“One of the biggest difficulties facing the cartel, however, is that there is a lag between output cuts and inventory changes,” Bank of America Merrill Lynch said in a note.
It said OPEC-led cuts take about three quarters to start drawing down inventories but U.S. shale producers can ramp up output in just four quarters to fill in the gap left.
Russia’s largest oil producer Rosneft said on Thursday it was ready to stick to crude output agreements with OPEC.
But there are signs that Saudi Arabia, OPEC’s largest producer, is keeping markets well supplied. Its crude exports rose by 275,000 bpd in March from February and its stockpiles also increased, official data showed on Thursday.
“I think the cuts are enough to stabilize the market. I think they will likely bring some stock draws but I don’t think it will bring the stock draws that OPEC is hoping for,” said Olivier Jakob, managing director at Petromatrix.Report Typo/Error
- Autodesk Inc$113.03-0.86(-0.76%)
- Home Capital Group Inc$9.270.00(0.00%)
- Caterpillar Inc$105.66+0.64(+0.61%)
- Crude Oil Front Month Futures$49.74-0.06(-0.12%)
- S&P/TSX Composite15,416.930.00(0.00%)
- Dow Jones Industrials21,080.28-2.67(-0.01%)
- S&P 500 INDEX2,415.82+0.75(+0.03%)
- NASDAQ NMS COMPOSITE INDEX6,210.190.00(0.00%)
- Toronto-Dominion Bank$64.250.00(0.00%)
- Canadian Natural Resources Ltd$40.000.00(0.00%)
- Canadian National Railway Co$103.700.00(0.00%)
- Potash Corporation of Saskatchewan Inc$22.370.00(0.00%)
- Wal Mart Stores Inc$78.13-0.18(-0.23%)
- Updated May 26 4:00 PM EDT. Delayed by at least 15 minutes.