Canada’s main stock index rose on Monday, extending its recovery from a six-month low last week, as heavyweight financial shares rallied and after Hudson’s Bay Co got a boost from an investor request that the company explore strategic options.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 73.5 points, or 0.48 per cent, at 15,266.04.
It follows a 1.8 per cent drop for the index last week. On Thursday, it touched its lowest intraday since Dec. 5 at 15,077.95.
“I think we were long overdue for a rally and I think we are getting it here,” said John Kinsey, portfolio manager at Caldwell Securities.
U.S. activist investor Jonathan Litt called for Hudson’s Bay to consider going private and to monetize its vast real estate holdings, sending shares in the department store retailer up 15.1 per cent to C$10.22.
The overall consumer discretionary group climbed 1.5 per cent, while the heavyweight financial services sector rose 0.8 per cent, led by gains for the country’s major banks.
Royal Bank of Canada, Canada’s biggest lender by assets and market value, advanced 0.8 per cent to C$94.30.
Investors have been encouraged by the Bank of Canada’s greater confidence in the outlook for the country’s economy, Kinsey said.
The central bank’s top two officials have said that rate cuts put in place in 2015 had largely done their work, and the bank would assess whether rates need to be kept at near-record lows.
The bounce for the Toronto market came as a rebound in technology stocks helped push Wall Street to record highs.
Canada’s technology sector rose 2.4 per cent, led by a 4.3 per cent advance in the shares of Shopify Inc to C$119.90.
Still, the nearly flat performance for the TSX this year compares poorly with a 9.6 per cent gain for the S&P 500. Recent weakening in commodity prices has weighed on Canada’s market.
U.S. crude oil futures settled 54 cents lower at $44.20 a barrel, while gold declined 0.8 per cent following hawkish comments from a top Federal Reserve official.
The energy group fell 0.5 per cent and the materials group, which includes precious and base metals miners and fertilizer companies, gained just 0.1 per cent.
Valeant Pharmaceuticals International Inc rose 5.9 per cent to C$17.79 after hedge fund manager John Paulson joined the company’s board.
Shares of Bombardier advanced 4.9 per cent to C$2.59. The company said it had received seven more orders for its Q400 aircraft from Philippine Airlines.
Wall Street at record highs on technology, health stocks strength
U.S. stocks rose on Monday, with the S&P 500 and the Dow Jones Industrial Average hitting record highs helped by a technology sector rebound and strength in healthcare and financial stocks.
Nasdaq’s biotechnology index rose 2.5 per cent and was on track for its biggest one-day gain since February helped by stocks including Biogen Inc and Clovis Oncology while the S&P’s healthcare index hit a record high.
The S&P technology sector was up 1.4 per cent after its second straight weekly decline, which was triggered by fears of stretched valuations. Tech stocks have led the S&P 500’s 9.4 per cent rally this year.
“(Technology) valuations are not cheap but it doesn’t seem to be a deterrent for buyers,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “Investors were temporarily chased from the space but many companies in the sector offer growth which is difficult to find in the market as a whole.”
Apple rose 3.8 per cent to $146.07, providing the biggest boost to technology followed by Microsoft, Alphabet and Facebook.
The financial sector was also one of the benchmark’s strongest gainers with a 0.9 per cent rise after New York Federal Reserve President William Dudley, a close ally of Fed Chair Janet Yellen, said U.S. inflation was a bit low but should rise alongside wages as the labour market continues to improve, allowing the U.S. central bank to continue gradually tightening monetary policy.
Yellen’s confidence as her team raised interest rates for the third time in six months last week surprised investors who had expected more caution about the economy following a set of weak U.S. economic data.
“That was notable in supporting the financial sector which does well under the prospects of better economic conditions and a steeper yield curve,” said Luschini.
The S&P 500 bank subsector was up 1.3 per cent At 2:48 P.M. (1848 GMT), the Dow Jones Industrial Average was up 119.2 points, or 0.56 per cent, to 21,503.48, the S&P 500 had gained 16.44 points, or 0.68 per cent, to 2,449.59 and the Nasdaq Composite had added 74.33 points, or 1.21 per cent, to 6,226.08.
Biogen shares were one of the top three S&P percentage gainers with a 3.96 per cent rise to $261.71, after it was upgraded to “neutral” from “sell” at UBS, which raise its price target to $270 from $262.
Shares of Clovis Oncology were up 46.9 per cent at $88 after late-stage data on its already approved ovarian cancer drug.
The S&P tech sector is trading at about 18.7 times forward earnings, compared with the historical 10-year average of 14.5, according to Thomson Reuters Datastream.
Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.
The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 99 new highs and 87 new lows.Report Typo/Error