Traders work on the floor of the New York Stock Exchange (NYSE) Oct. 21.Brendan McDermid/Reuters
Canadian stocks extended a rally to a fifth day and logged the best week since March as energy shares and banks advanced on signs inflation is picking up.
The S&P/TSX Composite Index gained 0.61 per cent, or 91.12 points, to 14,939.04 in Toronto. The gauge rallied 2.4 per cent in the week to the highest level since June 2015. Rallies among energy producers and miners have propelled the gauge to a 14-per-cent increase this year, making it the top performing developed equity market in the world, ahead of the U.K. and New Zealand.
Energy producers, Canada's second largest sector, rose 1 per cent, the highest gain among the index's 10 main groups.
Tourmaline Oil gained 6.4 per cent to the highest in 18 months after purchasing $1-billion in Western Canadian energy assets from Royal Dutch Shell Plc. Suncor Energy Inc. gained more than 1 per cent.
Raw-materials rose 0.9 per cent, led by Turquoise Hill Resources Ltd. The company said it expects to meet the "higher end" of its full-year target.
Concordia International Corp. jumped 13.9 per cent after the generic drug-maker announced chief executive Mark Thompson would step down.
Canada's inflation rate quickened in September for the first time in five months. The consumer price index rose 1.3 per cent in September from a year ago, led by higher gasoline prices. The Bank of Canada maintained the benchmark interest rate at 0.5 per cent this week and reduced Canada's growth profile in large part because of slower housing markets and a lower trajectory for exports.
U.S. stocks fluctuated as traders assessed mixed corporate earnings amid optimism on increased deal activity. The U.S. dollar climbed to a seven-month high.
American equities traded near the highs of the day as consumer companies rallied on British American Tobacco Plc's $47-billion bid for Reynolds American Inc. and reports that AT&T Inc. is pushing to clinch a deal to buy Time Warner Inc. Still, gains were limited by speculation the greenback's rally will damp earnings. Crude hovered above $50 a barrel as investors assessed the likelihood of a deal to reduce supply after Russia's energy minister said the country's output could rise to a record next year.
The earnings season is picking up pace as investors gauge the strength of corporations amid uneven economic growth. More than than 80 per cent of the S&P 500 Index's companies that have released third-quarter results so far beat expectations, while analysts still forecast a contraction in profits. The dollar's advance has also been in the spotlight as it reflects bets that U.S. monetary policy will diverge from stimulus measures in Europe and Asia.
"Earnings this season have been all over the place, a mixed-to-OK season," said Otto Waser, chief investment officer of R&A Group Research & Asset Management in Zurich. "Underlying earnings growth is close to zero, so why should the market move higher with interest rates going higher?"
The Dow Jones industrial average unofficially fell 16.71 points, or 0.09 per cent, to 18,145.64, the S&P 500 lost 0.18 points, or 0.01 per cent, to 2,141.16 and the Nasdaq Composite added 15.57 points, or 0.3 per cent, to 5,257.40.
Gains in Microsoft and McDonald's on the back of their strong quarterly reports helped keep losses in check.
Microsoft was up 4.2 per cent after hitting all-time high earlier in the trading day, while McDonald's was up 3 per cent.
"This is going to be an earnings reporting season that is going to be moving us back toward positive earnings growth," Bill Northey, chief investment officer at US Bank's Private Client Reserve in Helena, Mt., said. "But against that backdrop, we've seen a pretty strong jump in the dollar. We'll have to keep an eye on how strong the U.S. dollar becomes and how U.S. equity markets perform."
After surging as much as 7.2 per cent this year through a record in August, the S&P 500 has failed to push higher as investors assess central-bank policy, the strength of corporate America and economic reports. The index hasn't climbed for three consecutive sessions in a month, vacillating between daily gains and losses while trading at 18 times forecast earnings, the highest since 2009.
The dollar is also in the spotlight. The greenback gained versus most peers and for a fourth consecutive day against the euro. It is the strongest since March relative to the single currency after European Central Bank President Mario Draghi signaled that quantitative easing won't come to an "abrupt" end, leaving traders waiting until at least December for news about policy changes.
"If you have to translate foreign earnings into stronger currency your earnings expectations are going lower," said Mr. Waser. "This caps earnings upside quite a bit."
Investors are also parsing economic data and comments by policy makers for hints on the timing of the Federal Reserve's next interest-rate increase. Reports on manufacturing, consumer confidence, durable goods orders and gross domestic product will be in focus next week.
Traders are pricing in less than one-in-five odds of a hike at the Fed's next meeting, which takes place days before the presidential election, and a 69-per-cent chance of action in December. San Francisco Fed President John Williams is scheduled to deliver a speech this afternoon followed by a question and answer session.
Crude settled above $50 a barrel as investors assessed the likelihood of a deal to reduce supply after Russia's energy minister said the country's oil output may rise to a record next year.
December futures rose 0.4 per cent in New York after swinging between gains and losses during intraday trading. Russia's Energy Minister Alexander Novak said production could be adjusted depending on talks with OPEC. Russian President Vladimir Putin previously pledged his support to efforts by OPEC to limit output. Gasoline futures jumped after Delta Air Lines Inc.'s Trainer refinery in Pennsylvania was said to extend the shutdown of its fluid catalytic cracking unit.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement an accord to reduce oil output when they gather at an official meeting in November. A committee will meet later this month to try to resolve differences over how much individual members should pump.
"After the bulk of declarations from producer countries has come through after the Algiers meeting, there's not much fundamentally to be driving the market," Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. The market will "remain in this holding pattern until we have more clarity and possibly get news from the technical meetings that are going to be held in Vienna. After that, it will be more waiting until we find out whether or not OPEC actually delivers on the promise of a supply cut," he said.
West Texas Intermediate crude for December delivery rose 22 cents to settle at $50.85 a barrel on the New York Mercantile Exchange. Brent for December settlement increased 40 cents to end the session at $51.78 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of 93 cents to WTI.
With files from Reuters