TSX nears record as oil rallies, U.S. tax cut hopes revive

TORONTO (Reuters) - Canada’s main stock index rose on Thursday to its highest close in two weeks, nearing an all-time peak, as higher oil prices and the prospect of U.S. tax cuts helped trigger gains for heavyweight energy and financial shares.

A sign shows TSX information in Toronto September 15, 2008. REUTERS/Mark Blinch

U.S. President Donald Trump said he would be releasing a “phenomenal” tax plan in the next few weeks, reviving bets for pro-growth policies from the new administration.

“If he cuts corporate taxes ... it would obviously be very positive for a lot of companies south of the border and hopefully fuel growth,” said Manash Goswami, portfolio manager at First Asset Investment Management Inc.

“We continue to put capital to work, we continue to favor cyclical sectors over more defensive sectors.”

Cyclical sectors, such as financials, industrials and technology tend to benefit most from a pickup in economic growth.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 63.26 points, or 0.41 percent, at 15,617.30, its highest close since Jan. 25 and back in reach of its September 2014 record peak of 15,685.13.

Recent better corporate earnings and economic data have pushed the market higher, Goswami said.

Suncor Energy Inc, Canada’s largest oil and gas company, climbed 2.4 percent to C$41.47 after it reported a larger-than-expected fourth-quarter profit on Wednesday.

The overall energy group gained 2.3 percent, while U.S. crude oil futures settled 66 cents higher at $53.00 a barrel after an unexpected draw in U.S. gasoline inventories pointed to higher demand in the world’s biggest oil market.

The financials group rose 0.6 percent as bond yields climbed, with Royal Bank of Canada up 0.8 percent at C$96.17.

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

Manulife Financial Corp reversed earlier gains to fall 0.5 percent to C$24.45. Canada’s biggest insurer met a long-held target to achieve an annual profit of C$4 billion in 2016.

Just three of the index’s 10 main groups ended lower, with the materials group, which includes precious and base metals miners and fertilizer companies, declining 1.3 percent as gold and copper prices fell.

Gold futures fell 0.6 percent to $1,230.7 an ounce and copper prices declined 1.2 percent to $5,822 a tonne.

News and information company Thomson Reuters Corp reported higher-than-expected quarterly profit but missed expectations on revenue. Its shares fell 3.3 percent to C$56.80.

Telus Corp fell 2.3 percent to C$43.14 after it reported a smaller-than-expected quarterly profit.

(This version of the story corrects in tenth paragraph that Royal Bank of Canada closed at C$96.17, not C$96.25)

Reporting by Fergal Smith; Editing by James Dalgleish and Jonathan Oatis