TORONTO (Reuters) - Canada’s main stock index advanced for a third straight session on Thursday as shares of Royal Bank of Canada (RY.TO) and Toronto Dominion Bank (TD.TO) climbed after the country’s two biggest lenders reported quarterly results.
The market was also supported by comments from the Federal Reserve on Wednesday that sought to reassure investors that the U.S. central bank will gradually retreat from its highly stimulative monetary policy.
Stronger quarterly earnings at RBC and TD helped fuel gains in shares of other major banks and boost investor confidence in the broader market.
“Both Royal and TD had very strong beats today,” said Ben Jang, a portfolio manager who helps manage about C$2.5 billion in assets at Nicola Wealth Management.
The reports show that the overall market is improving, he added. “When you see strength in the banks, you should see carry-on flow with the rest of the market as well.”
RBC reported a 15 percent rise in quarterly profit, driven by strong domestic lending volumes and capital markets revenue. TD’s quarterly profit rose 16 percent on strong Canadian and U.S. retail lending.
The results were “phenomenal,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services, which owns shares of both RBC and TD.
“This is Goldilocks for the banks,” he added. “The bears are out dancing in the forest, and this is the time to gorge at the free money that the central banks are giving.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 52.43 points, or 0.36 percent, at 14,702.29. It is up about 8 percent this year.
“We’re quite constructive on Canadian equities,” said Jang, who expects improving global economic growth to provide support to the resource-sensitive Toronto market.
Six of the 10 main sectors on the index were higher on Thursday.
Shares of energy producers edged up, with Canadian Natural Resources Ltd (CNQ.TO) rising 0.2 percent to C$44.36.
Those gains helped push financial shares, the index’s most heavily weighted sector, up 1.1 percent.
Editing by Dan Grebler and Chris Reese