Canada's benchmark stock index closed at a record high on Friday as energy shares surged alongside oil prices and as investors bet the central bank will be less aggressive in raising interest rates than previously anticipated. The Toronto stock market, which also set an intraday record high, has climbed sharply since early September as traders have also been buoyed by strong economic growth and the relative value of Canadian shares compared to the United States.
The energy sector fuelled Friday's gain, jumping 2.6 percent as oil prices were lifted by support among the world's top producers for extending a deal to cut output. US crude prices rose 2.4 percent to settle at $53.90 a barrel. Canadian Natural Resources Ltd provided the biggest lift on the index, up 2.8 percent at C$43.39, while Encana Corp climbed 4.9 percent to C$14.43.
A more dovish tone from the Bank of Canada earlier this week has pushed rate hike expectations further into the future, potentially boding well for Canadian corporate earnings, said Bryden Teich, portfolio manager at Avenue Investment Management. "It means the economy is given a longer runway to continue to grow," said Teich. "The longer the economy has to continue to grow and build momentum and they're on the sidelines, the better it is for the market."
The Toronto Stock Exchange's S&P/TSX composite index ended up 61.88 points, or 0.39 percent, at 15,953.51. The index climbed as high as 15,963.60 during the session, topping the last intraday record set in February. It was the seventh consecutive week of gains for the Toronto stock market.
While the market may see a pullback from here, it could ultimately have more room to run, said Teich, who sees the index getting to 16,200 or 16,300 by year-end if corporate earnings are good and the economy continues to grow. Dairy producer Saputo Inc jumped 5.7 percent to C$47.48 after it agreed to pay up to $490 million for Murray Goulburn Co-operative, making it Australia's top milk producer.
Still, market gains were capped by a batch of earnings that largely fell short of expectations. Among them, Cameco Corp tumbled 6.3 percent to C$10.64 after the uranium producer posted a surprise third-quarter loss and cut its full-year production outlook. Celestica Inc shares slumped 9.7 percent to C$13.8 following guidance and results that missed expectations, while First Quantum Minerals Ltd shed 1.9 percent to C$14.21 after it posted a quarterly loss.
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