Commodity producers gave Canada's benchmark index its biggest gain of the year on Tuesday, as investors embraced lower Chinese inflation and looked beyond a credit-rating downgrade.
The S&P/TSX composite index closed at 12,484.05, up 139.49 points or 1.1 per cent – marking its biggest percentage gain since mid-November.
In the United States, the S&P 500 closed at 1568.61, up 5.54 points or 0.4 per cent. The blue-chip Dow Jones industrial average closed at 14,673.46, up 59.98 points or 0.4 per cent. That topped its all-time closing high of 14,662.01 from a week ago.
The gains followed a report showing that China's inflation rate eased more than forecast in March, which sent commodity producers on a tear.
However, investors also looked beyond a credit downgrade for China: Fitch Ratings lowered its rating on China's long-term local-currency bonds, to AA-minus from A-plus, pointing to rising financial risks in the fast-growing economy.
Within Canada's benchmark index, materials surged 2.3 per cent and energy stocks rose 2 per cent – an impressive rebound for two areas of the Canadian market that had been dragging on performance.
While the Dow and the S&P 500 have recently hit record highs, Canada's S&P/TSX composite index has been stuck in a fairly tight trading range for the past three years.
Commodities themselves showed far tamer moves. The Thomson Reuters/Jefferies CRB index rose just 0.6 per cent. Crude oil rose to $94.17 (U.S.) a barrel, up 81 cents. Gold rose to $1,584.60 an ounce, up $12.10.
Suncor Energy Inc. rose 3.1 per cent and Barrick Gold Corp. rose 1.5 per cent.
Agrium Inc. fell 2.8 per cent after activist investor Jana Partners LLC lost a proxy vote to shift the direction of the fertilizer producer with its own slate of directors.
In the U.S., Alcoa Inc. ended the day unchanged, after reporting first-quarter earnings on Monday evening that topped analysts' expectations. The company's sales missed expectations.
J.C. Penney Co. Inc. fell 12.2 per cent after its chief executive, Ron Johnson – the former Apple Inc. executive who was seen as the clothing retailer's biggest hope for a turnaround – was ousted.
Herbalife Ltd. fell 3.8 per cent after KPMG resigned as the firm's auditor, announcing that it had fired a partner over alleged disclosure of insider information. The company has had a high profile since late last year, when hedge fund manager Bill Ackman made a public presentation on why he thought the shares would fall to zero.