TSX hits fresh 19-month high as energy climbs

TORONTO (Reuters) - Canada’s main stock index rose to a fresh 19-month high on Tuesday, led by gains in heavyweight energy and banking stocks, while materials stocks weighed.

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

The Toronto Stock Exchange’s S&P/TSX composite index ended up 97.57 points, or 0.64 percent, at 15,385.27, its highest close since April 24, 2015.

“It’s just follow-through from the momentum over the last few weeks,” said Patrick Blais, senior portfolio manager at Manulife Asset Management.

The index has rallied 5 percent since the U.S. election in November, helped by the prospect of U.S. economic stimulus.

“I think the market was looking for a catalyst ... a lot of momentum has been building up in the U.S. economy,” Blais said.

Higher oil prices have added to recent momentum for Canada’s resource-linked market after the first agreement to cut production in eight years by the Organization of the Petroleum Exporting Countries.

U.S. crude oil futures settled up 15 cents at $52.98 a barrel, building on Monday’s strong rally, while the energy group jumped 1.7 percent.

Gains for the energy group came as former Texas Governor Rick Perry was chosen to head the U.S. Department of Energy.

Canadian Natural Resources Ltd rose 3.6 percent to C$45.85 a day after announcing the sale of its stake in the Cold Lake pipeline while maintaining access to the route to move its crude.

“The (stock) market is not expensive” and can continue to climb so long as the Federal Reserve does not raise interest rates too aggressively, Blais said.

Investors expect the Fed to lift rates by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday.

Financials, which have benefited from a recent rise in bond yields, gained 0.7 percent, with Royal Bank of Canada up 1 percent at C$91.20.

“What’s good for the oil patch is good right now for Canadian banks,” who benefit from reduced risk of loans to the energy sector turning sour, said Blais.

Just two of the index’s 10 main groups ended lower, with the materials group, which includes precious and base metals miners and fertilizer companies, losing 0.5 percent.

Copper prices declined 1.4 percent to $5,690 a tonne, while gold futures fell 0.5 percent to $1,158.3 an ounce.

The Canadian government should regulate the production of cannabis when it is legalized for recreational use, an official panel recommended. Canopy Growth Corp rose 7.9 percent to C$10.79.

Additional reporting by Alastair Sharp; Editing by Nick Zieminski and Meredith Mazzilli