A trader passes by the post where Hewlett Packard Enterprise Co., is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 25.BRENDAN MCDERMID/Reuters
Canadian stocks rose on Thursday, with the S&P/TSX Composite Index trading at the highest level since August, as oil prices rebounded after a decline in U.S. crude supply offset OPEC producers failing to agree on a new output ceiling.
The S&P/TSX rose 0.52 per cent, or 73.45 points, to 14,136.99 in Toronto after fluctuating in the morning. The index is up almost 9 per cent this year, the second most after New Zealand among developed-market nations.
The recent rally has maintained Canadian shares' more expensive valuation relative to their U.S. peers. The S&P/TSX now trades at 21.5 times earnings, about 11 per cent higher than the 19.4 times valuation of the S&P 500.
Global equities fluctuated amid the swings in crude prices and concerns about global growth. European Central Bank President Mario Draghi said the full effect of the central bank's stimulus measures have yet to spur growth, a day after manufacturing data disappointed from Japan to the euro zone. U.S. jobless claims dropped a third week, pushing the Federal Reserve closer to a potential interest-rate increase.
In Canada, energy producers rose 1 per cent to rebound from earlier declines of as much as 0.7 per cent. Oil recovered to near $49 a barrel, as U.S. stockpiles dropped the third time in four weeks. A meeting of the Organisation of Petroleum Exporting Countries in Vienna failed to produce a supply accord, leaving production unfettered amid a global supply glut.
Raw-material producers posted among the biggest gains out of 10 S&P/TSX groups. Detour Gold Corp. and Teck Resources Ltd. rose at least 2.5 per cent.
Concordia Healthcare Corp. tumbled 9.3 per cent. The stock had surged as much as 11 per cent earlier after StreetInsider.com reported Thursday Blackstone Group LP is near an agreement to buy the drugmaker. The shares then tumbled, with shares briefly being halted, after the Wall Street Journal reported Blackstone and Carlyle Group LP were said to walk away from a deal.
As a result, health care was the lone TSX sector to decline on the day.
The rally in Canadian equities, fuelled by a rebound in commodities prices and financials, has stalled this week amid renewed concerns weak global growth will constrain demand for basic materials, while the prospect of higher U.S. interest rates has sent the dollar higher.
Federal Reserve Chair Janet Yellen's comments on May 27 pointed to a likely interest-rate increase in coming months that is dependent on economic improvement. Traders have now priced in a 52-per-cent chance for an increase in July, according to data compiled by Bloomberg.
Global markets have started June tentatively, as investors assessed the ECB and OPEC decisions and await U.S. jobs data Friday that may determine the Fed's next policy move. Equities have failed to retake highs from late April as the U.S. central bank looks determined to tighten even as data continue to show tepid growth in the global economy. The U.K. vote on whether to remain in the European Union looms in three weeks.
"You've got to give the market some credit," Andrew Brenner, head of international fixed income at National Alliance Capital Markets in New York, said. "You have a lot of major stuff coming up in the market with investor sentiment extremely negative, and it doesn't seem to go down. That's a real positive itself."
The ECB didn't lift its inflation targets, raising concern that an enlarged stimulus program has yet to take hold a day after manufacturing readings from Asia to Europe signalled tepid growth. A U.S. jobs report from the ADP Research Institute showed 173,000 workers were taken on in May, while filings for U.S. unemployment benefits declined for a third consecutive week, according to a separate report.
The S&P 500 gained 0.3 per cent to 2,105.09 in New York, the highest since Nov. 3, after erasing earlier losses of as much as 0.5 per cent. The gauge closed above 2,100 for the first time since April 20. The Nasdaq Composite Index climbed 0.4 per cent to extend an advance to seven days, the longest since February 2015.
"Investors are rightly fixated on tomorrow's release with labour figures," said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. "Between the ECB, looking at initial jobless claims, and you add the ADP numbers and also OPEC, it really points to the limited expectations and none of the data points being outside the realm of what was anticipated."
The Stoxx Europe 600 Index rose 0.1 per cent, after Wednesday capping its biggest two-day decline in four weeks. A drop in energy companies helped outweigh gains among banks.
Energy and raw-material producers led the MSCI Emerging Markets Index up 0.2 per cent in its first gain this week. Chinese shares climbed in the final half hour of trading, lifting the Shanghai Composite Index up 0.4 per cent to a one-month high. The Hang Seng China Enterprises Index of mainland companies in Hong Kong rose 0.6 per cent.
Japan's Topix index tumbled 2.2 per cent after Prime Minister Shinzo Abe held back a widely-expected fiscal stimulus package. He postponed a planned sales-tax hike until October 2019 and vowed to take "bold" economic steps in the autumn.
Brent crude rose 0.6 per cent to $50.05 a barrel, while West Texas Intermediate added 0.5 per cent to $49.23.
Saudi Arabia was discussing ideas with fellow OPEC members including restoring a production target scrapped in December, according to delegates familiar with the situation. Iran resisted overtures from Saudi Arabia to restore a production target scrapped at the group's last meeting in December.
Gold rose 0.2 per cent, after falling on 10 of the last 11 trading days. Zinc climbed 0.7 per cent to the highest since July on the London Metal Exchange, while copper and nickel retreated.