TSX adds to 19-month high as financials rally
By Fergal Smith
TORONTO (Reuters) - Canada's benchmark stock index added to a 19-month high on Thursday, led by heavyweight financial shares as bond yields climbed after the European Central Bank's monetary policy decisions.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 57.45 points, or 0.38 percent, at 15,295.20, its highest close since May 2015.
"There's a lot of optimism on potentially reflationary forces back in the market," said Youssef Zohny, portfolio manager at StennerZohny Investment Partners of Richardson GMP.
Investors are betting that the policies of U.S. President-elect Donald Trump, such as infrastructure spending, tax cuts and deregulation of banks, will stimulate the economy.
The index has rallied more than 32 percent since hitting a three-year low in January and is up more than 17 percent for the year. However, the strength of the recent rally may have left it vulnerable to a correction.
"It seems like markets maybe pulled forward a bit too much optimism," Zohny said.
Financials gained 1 percent as bond yields rose after the European Central Bank said it would slow its stimulus program from April.
Higher bond yields reduce the value of insurance companies' liabilities and increase net interest margins of banks. Continued...