TORONTO (Reuters) - Canada’s main stock index rose on Thursday, helped by a second day of gains for energy shares after plumbing new depths earlier in the week, and with shares in Open Text Corp OTC.TO surging after the software company’s outlook impressed investors.
The energy sector jumped 2.9 percent, after gaining a similar amount on Wednesday, after separate data showed a much steeper than expected drawdown in U.S. stockpiles and a slip in U.S. production. [O/R]
“It’s bargain hunting in search of a bottom. Oil and gas is better on slightly better numbers, so that’s given them a whiff of hope,” said John Ing, president of Maison Placements Canada.
Open Text was the second-biggest driver for the TSX bounce, surging 22.3 percent to C$58.08 after reporting revenue that beat estimates for the first time in four quarters and raising its fiscal 2016 operating margin forecast.
Some energy names, such as Suncor and independent oil producer Cenovus Energy Inc (CVE.TO), did not react as expected following their earnings reports, said Colin Cieszynski, senior market analyst at CMC Markets Canada.
Cenovus shares climbed 2.1 percent to C$19 despite the company slashing its quarterly dividend by 40 percent and announcing another round of job cuts.
“I think what we’re seeing here is probably a bit of short-covering and bargain-hunting, just trading against the news,” said Cieszynski.
“Even though the results were disappointing, the stocks had been pretty solidly hammered already. I suspect there was already substantial disappointment already priced in.”
The energy group earlier in the week hit its lowest level since 2004, as producers slash jobs and spending amid slumping oil prices.
With the bounce, the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE gained 80.96 points, or 0.57 percent, to close at 14,382.76.
Eight of the index’s 10 main groups gained, with almost as many decliners as advancers.
Bombardier Inc (BBDb.TO) fell 9.7 percent to C$1.76, after the plane and train maker said it was delaying delivery of its latest Global business jet. It also reported lower earnings and greater cash burn.
First Quantum Minerals (FM.TO) shares also tumbled, off 10.4 percent at C$10.12 after its earnings also fell short of expectations.
Additional reporting by Solarina Ho; Editing by James Dalgleish