March 3, 2017 / 12:48 PM / 2 years ago

TSX notches 1-week high as oil rallies, Yellen signals hike

TORONTO (Reuters) - Canada’s main stock index rose on Friday to its highest close in a week as oil prices gained and Federal Reserve Chair Janet Yellen pointed to a U.S. interest rate hike this month, while investors embraced recent strengthening of the Canadian economy.

A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch/File Photo

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE hit a three-week low on Tuesday but recovered to end the week 0.5 percent higher as some of the country’s major banks and energy companies reported stronger-than-expected earnings.

“You are seeing (growth) on the earnings side at the corporate level but you are also seeing it on the economy side as well,” said Bryden Teich, portfolio manager at Avenue Investment Management.

“You are having underlying stronger economic growth in Canada and I think that’s helped the market.”

Data on Thursday showed Canada’s economy grew at a 2.6 percent annualized rate in the fourth quarter, faster than economists had expected.

The TSX closed up 71.85 points, or 0.46 percent, at 15,608.50, its highest close since Feb. 23.

Last week the TSX reached a record high of 15,943.09. It has gained 2.1 percent this year after climbing 17.5 percent in 2016.

The most influential movers on the day included Canadian Natural Resources Ltd (CNQ.TO), which added 3.2 percent to C$41.81, extending Thursday’s sharp jump after posting stronger-than-expected earnings.

The energy group climbed 0.8 percent overall as oil prices rose.

U.S. crude oil futures CLc1 settled 72 cents higher at $53.33 a barrel as a weaker U.S. dollar encouraged buying. [O/R]

The financials group gained 0.5 percent, with Bank of Nova Scotia (BNS.TO) up 1.6 percent to C$79.96 and Toronto-Dominion Bank (TD.TO) adding 0.9 percent to C$69.26.

TD reported earnings this week that beat forecasts. Its U.S. exposure is seen as a positive.

Canada’s banks are already seeing the benefits of pro-growth policies pursued by U.S. President Donald Trump, executives said, with expectations of tax cuts, lighter regulation and fiscal stimulus boosting market confidence.

The Fed is set to raise interest rates this month and on track to lift them further later this year, Yellen signaled.

Higher rates could help boost the net interest margins of banks.

Nine of the index’s 10 main groups ended higher, with industrials rising 0.6 percent as railroad stocks climbed, while the materials group, which includes precious and base metals miners and fertilizer companies, added 1.3 percent.

TransAlta Corp (TA.TO) advanced 6.1 percent to C$7.48 after the utility reported quarterly earnings.

Additional reporting by Alastair Sharp; Editing by W Simon and Meredith Mazzilli

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