Canada’s main stock index rose on Tuesday, led by gains for natural resource stocks in a broad rally after strong manufacturing data presented further evidence of a third-quarter economic rebound.
Teck Resources advanced 3.6 per cent to $26.49, touching its highest since mid-2014, after several banks upped their price targets and outlooks for the stock on Monday.
The most influential gainers on the index also included Barrick Gold Corp, up 2.5 per cent to $21.39, and pipeline company TransCanada Corp, which advanced 1.2 per cent to $61.86.
The Toronto Stock Exchange’s S&P/TSX composite index was up 86.05 points, or 0.59 per cent, at 14,682.57. Advancers outnumbered decliners by almost 5-to-1.
Nine of the index’s 10 main groups were in positive territory, with only consumer discretionary stocks lagging.
Amaya Inc fell 7 per cent to $18.91 after the online gambling company said it had abandoned merger talks with Britain’s William Hill.
Canadian manufacturing sales in August jumped much more than expected on widespread strength, reinforcing expectations that broad economic growth rebounded in the third quarter.
The energy group climbed 0.7 per cent, even as oil prices moved sideways.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1.4 per cent.
OceanaGold Corp’s Toronto-listed stock advanced 6.6 per cent to $4.03 after the Australian miner provided an update on its Philippines operations.
The financials group gained 0.5 per cent and industrials rose 0.3 per cent.
The S&P and the Nasdaq were on track for their best day this month on Tuesday as a slew of market-beating results from marquee companies boosted optimism about Corporate America’s health.
The spotlight was on the healthcare sector, which rose 1.04 per cent, the most in more than one month, after UnitedHealth’s upbeat forecast. UnitedHealth rose 6.3 per cent and boosted its fellow health insurers.
Netflix, which dragged on the market on Monday ahead of its results, was the biggest gainer on the S&P 500 on Tuesday, rising nearly 19 per cent after posting much higher-than-expected subscriber growth.
Goldman Sachs rose 2.2 per cent, lifting shares of other banks, after the company’s results blew past Wall Street estimates, mirroring results at its Wall Street peers.
Of the 37 S&P 500 companies that have reported results until Monday, 78 per cent have reported earnings that have topped analysts average estimate, according to Thomson Reuters I/B/E/S.
Analysts now estimate earnings of S&P companies slipped 0.1 per cent in the third quarter, less than their earlier estimate of a drop of 0.7 per cent, raising hopes that a four-quarter streak of negative earnings growth could be snapped.
“We’re seeing the delta improve to the upside in this earnings season and that sets the tone for the fourth quarter performance,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
The Dow Jones Industrial Average was up 77.49 points, or 0.43 per cent, at 18,163.89.
The S&P 500 was up 13.21 points, or 0.62 per cent, at 2,139.71 and the Nasdaq Composite was up 52.14 points, or 1 pe rcent, at 5,251.97.
Even economic data helped boost sentiment. U.S. consumer prices recorded their biggest gain in five months in September, pointing to a steady build-up of inflation that could keep the Federal Reserve on track to raise interest rates in December.
“The economy continues to show signs of improvement, with the CPI data showing that there are signs of a modest level of inflation creeping into the marketplace,” Sandven said.
Nine of the 11 major S&P 500 sectors were higher, with only the interest rate-sensitive utilities and telecom services in the red.
Among the laggards was IBM, which fell 3.3 per cent after reporting its 18th straight quarter of revenue decline.
Johnson & Johnson was down 2.4 per cent, while Pfizer gained 0.8 per cent on after it announced plans to ship a cheaper biosimilar to Remicade, JNJ’s top selling product. The news overshadowed J&J’s slight earnings beat.
Intel, scheduled to report after markets close, rose 1.6 per cent on a Barclays upgrade. Yahoo, also due to report in the evening, was up 0.7 per cent.
Oil prices drifted on Tuesday, erasing early gains, after a rebound in the dollar offset optimism built on OPEC promises to curb output when it meets in November.
The dollar turned positive, shedding its early weakness, on speculation that recent U.S. economic data strengthened the case for higher U.S. interest rates. A firmer dollar makes crude oil and other commodities denominated in the greenback less affordable to holders of other currencies.
Oil prices are up 13 per cent from three weeks ago after the Organization of the Petroleum Exporting Countries proposed its first output cut or freeze in eight years to rein in a global crude glut when it gathers on Nov. 30 for its policy meeting.
The oil rally has, however, stalled at around $50 a barrel on doubts whether OPEC will reach a deal that will satisfy all its 14 members. Most in the Saudi-led cartel need higher prices to repair damage done to their economies after crude fell to almost $26 a barrel this year from 2014 highs above $100. But some, like Iran, prefer not to cut output.
“There is definite willingness and desire on behalf of most countries to see prices go higher,” Ian Taylor, chief executive at Vitol, the world’s top oil trader, said at an industry conference in London.
“Expectations are that we will get something; whether it is quite good enough to get a substantial rebalancing in the short term, I am not sure.”
Brent crude was down 20 cents, or 0.4 per cent, at $51.32 a barrel. It had risen 1 per cent earlier to a session high of $52.09.
U.S. West Texas Intermediate (WTI) crude slid 5 cents to $49.89, after reaching $50.53 earlier.
“We shorted WTI this morning at $51,” said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey. “We think ultimately that over the course of the next 30 days or so, it will drop down to $37.50 or possibly lower.”
Some remain positive in their supply-demand outlook for oil.
Analysts at Bernstein Energy said global oil inventories rose by just 17 million barrels to 5.618 billion barrels in the third quarter, the smallest build since the fourth quarter of 2015.
Saudi crude exports in August fell to 7.305 million barrels per day from 7.622 million bpd in July, data showed on Tuesday.
Even so, some say there is too much riding on OPEC being able to balance supply-demand in the near term, with prices often rising when the cartel’s members spoke in recent weeks.
“The market continues to reward even the thinnest rays of light that the glut could finally be easing,” said John Kilduff, partner at New York energy hedge fund Again Capital.
- Barrick Gold Corp
- OceanaGold Corp
- TransCanada Corp
- Crude Oil Front Month Futures
- S&P/TSX Composite
- Dow Jones Industrials
- S&P 500 INDEX
- NASDAQ NMS COMPOSITE INDEX
- Amaya Inc
- Netflix Inc
- International Business Machines Corp
- Johnson & Johnson
- Pfizer Inc
- Updated October 18 12:08 PM EDT. Delayed by at least 15 minutes.