TORONTO (Reuters) - Canada’s main stock index rebounded on Monday, with robust gains from major banks and a surge in some gold miners and energy companies helping the index rise over 1 percent, more than cancelling out Friday’s slump.
Four of the six biggest positive drivers were banks. The financials group, which also includes insurers and makes up roughly a third of the index, climbed 1.2 percent.
“In a period of zero interest rates they remain attractive,” said John Ing, president of Maison Placements Canada. “The dividends of the banks are a good refuge.”
But while the energy group jumped almost 3 percent, Ing said the outlook is more uncertain in that major part of the index.
“The market gets encouragement from fewer wells being drilled or (disappointed by) too many rigs, and it vacillates from week to week,” he said. “But the overall direction we believe is still down because the problems still remain. That is, overproduction.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 163.69 points, or 1.14 percent, to 14,466.39. Half of the 10 main groups rose, with seven advancing stocks for every two decliners.
“It’s a relief rally, truthfully,” said John Stephenson, President & CEO at Stephenson & Company Capital Management.
“Earnings have been decent, so that’s a plus. So you’ve got a little bit of a pick up in some of the commodities, though not much. You had Shanghai and the Asian markets up overseas.”
Gold miners were helped by slightly higher bullion prices, which found support around the $1,100-an-ounce level. Base metal miners were aided by copper prices that rebounded from six-year lows following stronger-than-expected imports from China, despite otherwise disappointing economic data.
Despite Monday’s gains, Stephenson expects the index to see more volatility throughout August. “I think the forecast is for more unsettled weather to come,” he said.
Additional reporting by Solarina Ho; Editing by Nick Zieminski and Diane Craft