TORONTO (Reuters) - Toronto’s main stock index finished marginally higher on Friday as optimism over the economic recovery buoyed financial shares but did not extend to most of the other sectors.
A 1.81 percent gain in the index’s heavily weighted financials group -- a big turnaround from the opening bell when it declined sharply -- was almost single-handedly responsible for propping up the index as most of its other sectors fell.
All five of the market’s big banks and its biggest insurer dominated the heavyweight gainers list. The list was topped by Bank of Nova Scotia, which jumped 3.45 percent to C$45.33, and Manulife Financial, which climbed 3.44 percent to C$24.64.
Euphoria following the Bank of Canada’s mostly rosy economic outlook on Thursday carried through to the financials on Friday on hopes that the group will benefit from better economic times.
“The financials will be one of the biggest beneficiaries as we would expect fewer nonpayments of loans and that the lending business will continue to get stronger,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.
“But overall today, it looks like a picture of a wait-and-see mode. The markets have really been on either side of zero.”
The S&P/TSX composite index closed up 12.22 points, or 0.11 percent, at 10,687.90. It dropped nearly 1 percent early in the session, pressured by disappointing results from U.S. companies such as Microsoft Corp and Amazon.com Inc.
But in a show of resilience, the results did not have a lasting impact and the TSX focused on the economic recovery instead and edged to a six-week high.
“The market is limping to the finish line today,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
He said the market “deserves to pause here” after having rallied for much of July already. The TSX is up for a second straight week, a 3.1 percent gain to build on the previous week’s 6.3 percent rise. Since its March low, the TSX has risen more than 40 percent.
“By any measurement that is a significant move and we would be surprised if it was to go significantly higher here,” Chandler said.
Eight of the TSX’s 10 main groups were lower. The utilities group was the only other sector to contribute a bit of support, nudging up 0.29 percent.
The index’s big energy and materials groups fell 0.82 percent and 0.21 percent respectively.
Decliners included Suncor Energy, off 3.2 percent at C$35.54, and Petro-Canada, down 3.2 percent at C$45.44. Potash Corp, which was a strong advancer in the previous session, handed back some of those gains, falling 0.97 percent to C$103.58.
Reporting by Ka Yan Ng; editing by Peter Galloway