Canada's main stock index showed no signs of slowing its ascent into uncharted territory on Friday, with gold miners and banks helping it to another record close and a 1.2 percent gain in a week of all-time highs. With the Toronto Stock Exchange's S&P/TSX composite index still relatively underperforming US indices, investors are confident that economic fundamentals underpin the rally, despite worries of a pullback.
"In the grand scheme of things I'm fairly comfortable with valuations," said Marcus Xu, a portfolio manager at MY Capital Management Corp in Vancouver. "The overall theme is that emerging markets seem to be doing OK," Xu said. "On the back of that notion commodities are doing fairly well." Canada's stock market relies on natural resource names for much of its bulk, and signs of global recovery help those stocks on the expectation that demand will pick up. Major gold miners were among the biggest positive contributors in the session, with Goldcorp Inc jumping 4.2 percent to C$30.51 and Barrick Gold Corp adding 2.8 percent to C$20.20.
Rick Hutcheon, president at RKH Investments, said that equities are likely to remain more popular than fixed income while interest rates are low and looking to rise, and that energy and financial stocks are well placed to gain from global recovery and higher rates.
"There really aren't a whole lot of choices until the Fed starts to raise rates, which as an aside appears to be still a year-ish away," he said, referring to the US Federal Reserve. Some of Canada's biggest banks also helped the push on Friday, with Toronto-Dominion Bank up 1.2 percent to C$56.52 and Royal Bank of Canada gaining 0.7 percent to C$79.89.
Shares in TransForce Inc jumped 10.5 percent to C$27.82 after the transportation and logistics company said late on Thursday it planned to buy freight transport company Contrans Group Inc for C$495 million. Among resource stocks, Potash Corp gained 1.3 percent to C$39.42 on evidence that fertiliser demand was improving. The Toronto Stock Exchange's S&P/TSX composite index ended up 60.59 points, or 0.39 percent, at 15,455.04, its fourth straight session hitting an intra-day record high. The index gained 1.2 percent for the week.
Earlier in the week, geopolitical disturbances in Ukraine and the Middle East forced a minor retreat, but RKH's Hutcheon said those risks are unlikely to affect sentiment again without a major escalation. Canada said on Thursday it would impose sanctions on a range of Russian firms and banks to punish Moscow for what it said was the illegal occupation of Crimea and "provocative military activity" in eastern Ukraine.
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