CANADA STOCKS-Resource shares push TSX to seven-week high

Fri Jul 19, 2013 5:29pm EDT

Related Topics

* TSX rises 56.28 points, or 0.45 percent, to 12,685.13
    * Six of the 10 main index sectors decline
    * Index posts gain of 1.8 percent on the week
    * Gold miners jump more than 4 percent

    By John Tilak
    TORONTO, July 19 (Reuters) - Canada's main stock index
climbed to its highest level in more than 1-1/2 months on
Friday, ending the week higher after a rise in commodity prices
buoyed shares of natural resource companies and boosted market
sentiment.
    The Toronto index's weekly gain, 1.8 percent, was its fourth
in a row. Over the last few days of the week investors cheered
reassurances from Federal Reserve Chairman Ben Bernanke that the
U.S. central bank's plans to scale back monetary stimulus will
be flexible.
    On Friday, the strength in resource shares helped the index
do better than U.S. stocks, bucking the long-term trend of
Canadian equities performing poorly compared with U.S. markets.
    "The expectations have been extraordinarily low for Canadian
stocks, but they are improving somewhat," said Bob Gorman, chief
portfolio strategist at TD Wealth, which manages assets of $211
billion across North America.
     "U.S. will outperform in general going forward, though
we'll play a bit of a catch-up in the short to medium term." 
    Gorman, who expects the benchmark Canadian index to end the
year at 13,200, expects steady growth in Toronto stocks and sees
a modest rebound ahead for the index's energy and materials
sectors.
     The Toronto Stock Exchange's S&P/TSX composite index
 closed up 56.28 points, or 0.45 percent, at 12,685.13,
after reaching 12,693.87, its highest level since May 31,
earlier in the day. 
    As a result of the pounding resource stocks have taken due
to low commodity prices, some investors are beginning to
reassess their positions, Gorman said.
    "The expectations are battered and prices are awfully low so
people are having a few second thoughts and saying, 'over
anything but the short term, these are probably going to be
worth more than they are right now'."
    Six of the 10 main sectors on the index were in negative
territory, but the three weightiest groups advanced.
    The index's materials sector, which includes mining stocks,
rose 2 percent, benefiting from a 4.1 percent surge in gold
producers. Gold rose 0.8 percent due to a decline in the U.S.
dollar, with Bernanke's comments this week also providing
support. 
    Barrick Gold Corp jumped 5 percent to C$17.16, and
Goldcorp Inc gained 3.7 percent to C$28.34. They played
the biggest role of any two stocks in driving the index higher.
    Shares of energy producers were up 1.1 percent, tracking
higher oil prices. In the group, Canadian Natural
Resources Ltd advanced 1.3 percent to C$34.35. Suncor
Energy Inc gained 1.4 percent to C$33.
     John Stephenson, senior vice president at First Asset
Investment Management, expects the diminishing spread between
the price of Western Canada Select and the West Texas
Intermediate crude oil benchmark, as well as a recent rally in
oil prices to continue to drive energy stocks.
    "Oil is the single biggest story," he said. "There's
tremendous potential for further gains since you have several
factors working in its favor."
    Financials, the index's most heavily weighted sector, gained
0.2 percent. Royal Bank of Canada, the country's biggest
lender, added 0.5 percent to C$65.09, and Bank of Montreal
 rose 0.4 percent to C$64.67.
    The Canadian earnings season unofficially kicks off next
week. Analysts expect companies to post small overall gains in
second-quarter profit, as strength in the energy and insurance
sectors is offset by struggling miners.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.