TORONTO (Reuters) - A declaration by the Bank of Canada that the country’s recession is almost over helped propel Toronto’s main stock index to its highest level in nearly six weeks on Thursday.
The central bank said Canada will pull out of recession during this quarter and also that the world economy has likely averted a worst-case scenario and is bottoming out.
“They seem to think the worst is behind us and perhaps better times are ahead. The market usually anticipates the economy four to five months ahead,” said Bruce Latimer, a trader at Dundee Securities.
Firm oil and metals prices also encouraged big gains in the index’s resource sectors, with the energy group advancing 2.94 percent and the materials group rising 2.25 percent.
Top gainer Potash Corp shot 7.27 percent higher to C$104.59 as the fertilizer producer announced that Canpotex, the marketing unit for Potash, Mosaic Co and Agrium Inc, will sell potash to India at $460 a metric ton.
That lifted a market mood that had been sour on the outlook for global fertilizer prices, spurring investors to look past Potash’s almost 80 percent drop in second-quarter profit and its cut in its full year financial forecast.
The financial sector, which accounts for about a third of the TSX index, jumped 2.83 percent, boosted by the Bank of Canada’s assessment and by better than expected corporate earnings in the United States.
“The way I look at it is that all of a sudden people...will stop saying the glass is half empty. It’s half full,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
The S&P/TSX composite index closed up 243.33 points, or 2.33 percent, at 10,675.68, its highest level since June 12.
Six of the top 10 heavyweight gainers were from the index’s financial sector. Manulife Financial was up 4.89 percent at C$23.82, and Toronto-Dominion Bank was up 3.13 percent at C$61.69. Royal Bank of Canada, Sun Life Financial, CIBC and Bank of Nova Scotia also made healthy gains.
In other sectors, independent energy producer Canadian Natural Resources was up 5.13 percent at C$63.68, while BlackBerry smartphone maker Research In Motion rose 3.35 percent to C$83.29.
Nine of the index’s 10 main groups were higher, with five sectors notching gains of 2 percent or more.
The lone decliner was the consumer staples group, which fell 0.62 percent. Shoppers Drug Mart was the biggest index loser, down 3.92 percent at C$45.40. Desjardins Securities cut its rating on Canada’s biggest pharmacy chain to “hold” from “buy”, a day after the company reported higher quarterly profit that matched expectations.
Additional reporting by Nina Lex; editing by Peter Galloway