The Toronto Stock Exchange's main index soared to its biggest percentage gain since 1987 on Friday, as a series of US-led moves to shore up the global financial system sparked a resource-led rally across all sectors. The second-straight day of strong gains for the index came as global markets rallied on the US plan to take over hundreds of billions of dollars worth of toxic mortgage debt, and slap a temporary ban on short-selling.
The energy and materials sectors led the way with gains of 8.9 percent and 9.6 percent, as oil charged above $100, while extra liquidity in the markets helped mining stocks rebound from their sharp declines of the past week. "You only get days like this once in a blue moon," said Paul Hand, managing director at RBC Capital Markets.
"It's so sweeping, not just the market action, but the unprecedented number of initiatives with respect to market activity. It's unbelievable." The S&P/TSX composite index rose 848.42 points, or 7.03 percent, to finish at its session-high of 12,912.99, marking its largest one-day percentage gain since the aftermath of the October 1987 stock market crash. It was the market's biggest one-day points gain.
Among energy stocks, Suncor Energy rose 14.3 percent to C$52.00, while Canadian Natural Resources gained 11.9 percent to C$87.31. Leading the way among mining issues was Lundin Mining, which rose 16.4 percent to C$3.90, and Barrick Gold, which charged ahead 12.3 percent to C$36.50 as gold prices rose above $870 an ounce.
The US moves, which followed a co-ordinated efforts by central banks on Thursday to inject billions into the financial system, sent the previously underperforming financials sector up 5.7 percent to its highest level in three months. Toronto-Dominion Bank leapt 9.6 percent to C$64.94, while insurer Great-West Lifeco climbed 10.2 percent to C$35.29.
"It would certainly seem as though the events of the last two weeks have marked a watershed in terms of the willingness of the authorities to step in and prevent systemic risk to the system," said Gavin Graham, chief investment officer at Guardian Group of Funds.
Prime Minister Stephen Harper said the Canadian government was not considering a bailout plan for the country's banks, which are in good shape despite the financial crisis in the United States. Nor was there an announcement by Canadian regulators to curb short-selling, the practice of borrowing a stock on a bet that its price will fall.
Analysts said that while the one-day rally may have gone too far, they said the market has likely hit bottom. "I think there are a few hiccups here to come, so we're probably a little ahead of it today, but they have probably put a floor under it for several months," said Hand.
The TSX's strong proportion of resource stocks allowed it to outpace US markets. In Toronto, the blue chip S&P/TSX 60 index closed 54.44 points higher, or 7.5 percent, at 776.87. Market volume was a heavy 831 million shares worth C$17.9 billion. Advancing issues outpaced decliners 1,214 to 409.
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