CANADA STOCKS-Fed optimism, Tim Hortons lift TSX to 1-week high

Tue Jun 18, 2013 4:55pm EDT

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* TSX rises 78.56 points, or 0.64 percent, at 12,367.46
    * Nine of 10 main sectors advance
    * Tim Hortons up 4 percent after investor exerts pressure
    * Gold-mining shares slip with price of bullion

    By John Tilak
    TORONTO, June 18 (Reuters) - Canada's main stock index
climbed to a one-week high on Tuesday as positive economic data
and hopes that the U.S. Federal Reserve will stick to its
supportive monetary policy drove gains in almost every major
sector.
    Coffee chain Tim Hortons Inc also boosted Canada's
main stock index rising 4 percent on news that it now faces
pressure from U.S. hedge fund Scout Capital Management to make
changes after recently outlining plans to address the concerns
of activist investor Highfields Capital. 
    Sentiment improved further after U.S. consumer prices rose
in May and a gauge of underlying price pressures indicated signs
of stabilizing after a long decline. 
    However, speculation continued on whether the Fed will shed
light at the end of its two-day meeting on Wednesday on when it
might begin scaling back its bond buying program.
    While global markets were roiled in recent weeks by talk of
a possible stimulus rollback, investors have over the past two
days been betting that the Fed will not turn off the monetary
tap anytime soon.
    "It's like a doctor saying to the patient, 'you don't need
as much medicine anymore' and the patient saying, 'No, no, I
want more medicine'," said Stan Wong, vice president and
portfolio manager at Macquarie Private Wealth.
    "Based on current data, I don't see the Fed stepping in and
reducing stimulus in a major way until at least the first
quarter of next year."
    "The Fed is always late to the game," he added. "They're
late coming in and adding stimulus and they are late leaving as
well."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 78.56 points, or 0.64 percent, at 12,367.46,
after earlier touching 12,389.07, its highest level since June
10.
    "The U.S. economy is still creating jobs, and the housing
market appears to be getting better, but is it completely
planted on its feet?" said Gareth Watson, vice president,
investment management and research, at Richardson GMP. "I don't
think the Fed is convinced of that yet."
    Nine of the 10 main sectors on the index were higher.
    Energy shares climbed more than 1.2 percent, benefiting from
the U.S. data that pushed up oil prices. In the group,
Suncor Energy Inc added 1.6 percent to C$31.75 and
played an influential role in leading the index higher.
    Financials, the index's most heavily weighted sector, gained
0.7 percent. Royal Bank of Canada, the country's top
lender, rose 1.2 percent to C$61.15 and played the biggest role
of any single stock in leading the market higher.
    The jump in Tim Hortons, to C$56.05, helped the consumer
discretionary group climb 1.6 percent.
    "This is just a natural process where people are expecting
that perhaps with this investor stepping in, changes (at Tim
Hortons) could be afoot," Watson said. "There's no guarantee,
it's no slam dunk at all that that happens, but certainly
speculation picks up."
    Shares of gold producers tumbled 2.9 percent after a decline
in the price of bullion. 
    "The catalyst for gold to go up has largely dissolved,"
Macquarie's Wong said. He noted that gold has lost its luster as
a safe haven asset with gradually improving global economic
conditions.
    Barrick Gold Corp gave back 2.6 percent to C$19.24,
and Goldcorp Inc slipped 2 percent to C$27.71.
    In a Reuters poll released on Tuesday, analysts predicted
the resource-heavy Toronto stock index, which has struggled to
gain traction in 2013, would kick into gear in the second half
of the year as the global economy rebounds.
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