TORONTO (Reuters) - Canada’s main stock index hit a two-week high on Tuesday after U.S. Federal Reserve Chair Janet Yellen calmed the markets with an assurance that the central bank’s move to wind down its stimulus program is on track, signaling Fed confidence that the U.S. economy is growing.
Those comments, Yellen’s first public remarks in her new post, helped drive gains in every major sector of the index and sent gold-mining shares to a five-month high.
Investors also cheered an attempt by Republicans in the House of Representatives to push forward legislation that extends U.S. borrowing authority for a year with no strings attached.
Yellen noted that the U.S. labor market recovery was “far from complete” and said there was a need to keep an eye on a broad range of labor market indicators, but in comments that were soothing to markets she stressed continuity with the policies of her predecessor, Ben Bernanke.
The benchmark Canadian index was up for a sixth straight session, and appeared to be showing signs of stabilizing after a volatile phase triggered by turmoil in emerging markets.
“Based on the market reaction, it sounds like (Yellen) has done a very good job of striking the right tone… and in terms of easing off the tapering but not pulling back so quickly that it creates market panic,” said Atul Tiwari, managing director of Vanguard Investments Canada, a unit of Vanguard Group, which manages $2.6 trillion in global assets.
But he added a cautious note. “We’re seeing a lot of volatility. In the near to medium term, our view on the global equity market has become more guarded,” he said. “We encourage investors to be cautious about increasing their equity risk in the current environment.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 86.81 points, or 0.63 percent, at 13,880.99.
Tiwari said he was seeing Canadian investors gravitate towards U.S. equities, citing Vanguard research based on ETF cash flows. Pressure on materials and energy stocks will weigh on Canadian equities this year, he said.
Nine of the 10 main sectors on the index were higher on Tuesday.
Financials, the index’s most heavily weighted sector, added 0.4 percent. Royal Bank of Canada RY.TO rose 0.2 percent to C$70.12, and Bank of Nova Scotia BNS.TO climbed 0.4 percent to
Energy shares advanced 0.3 percent. In the group, Canadian Natural Resources Ltd CNQ.TO climbed 0.8 percent to C$37.67.
Shares of gold-mining companies surged 3.1 percent, a reflection of a jump in the price of bullion. <GOL/> Goldcorp Inc G.TO was up 2.5 percent at C$29.47, and Barrick Gold Corp ABX.TO rose 1 percent to C$21.56.
Detour Gold Corp shot up 11.8 percent to C$9.20, recording the biggest percentage gain on the index.
In corporate news, BlackBerry Ltd BB.TO said on Monday that Andrew Bocking, the executive in charge of its BBM instant messaging business, has left the company. The stock was down 1.4 percent at C$10.77 on Tuesday.
Editing by Peter Galloway