TSX rises, led by banks as U.S. earnings season kicks off

TORONTO (Reuters) - Canada’s main stock index rose on Friday, as higher bond yields and solid U.S. bank earnings helped boost the index’s heavyweight financials sector.

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

The broad gains - resource stocks, consumer names and industrials also broadly moved higher - capped a tumultuous week dominated by uncertainty about the likely policies of U.S. President-elect Donald Trump.

“When Mr. Trump makes a comment about a specific company, a sector, whatever it may be, he moves markets,” said Allan Small, a senior investment advisor at HollisWealth. “We should expect this (volatility) more often heading into 2017.”

Executives of big U.S. banks expressed optimism on Friday about the outlook for 2017 in their first public comments about quarterly earnings since the U.S. presidential election in November.

Their strong results at the start of U.S. earnings season and higher bond yields after data showed U.S. retail sales rose solidly in December helped boost Canadian lenders, Small said.

Royal Bank of Canada RY.TO climbed 0.8 percent to C$94.50 and insurer Sun Life Financial Inc SLF.TO rose 2.2 percent to C$52.60, while the overall financials group gained 0.7 percent.

Higher bond yields increase net interest margins of banks and reduce the value of insurance companies’ liabilities.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 79.12 points, or 0.51 percent, at 15,497.28.

That was barely a point higher than where it ended last week, when it touched its highest since September 2014.

The owner of the Sobeys supermarket chain, Empire Co Ltd EMPa.TO, jumped 7.7 percent to C$16.72 after naming a former Canadian Tire Co Ltd CTCa.TO executive as its new chief executive officer.

“He’s known to some as a technician. They’re saying he’s going to be able to come in and really turn around Empire’s issues, which primarily are with the Safeway acquisition,” HollisWealth’s Small said.

Consumer staples rose 1.4 percent, while the materials group, which includes precious and base metals miners and fertilizer companies, rose 1 percent as higher copper prices boosted the likes of Teck Resources Ltd TECKb.TO, which ended up 2.8 percent at C$32.45.

AltaGas Ltd ALA.TO fell 4.9 percent to C$32 after the energy infrastructure company said it was in talks about a potential transaction.

The broader energy group gained 0.5 percent, as data showed they more than doubled the number of rigs drilling for oil this week to the highest level in almost two years.

Additional reporting by Fergal Smith; Editing by Bill Trott and Lisa Shumaker