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Roundup: Canadian stocks rise on positive GDP growth

Xinhua, March 2, 2016 Adjust font size:

Canada's main stock market in Toronto rallied on Tuesday after data show the country's economic growth in 2015 was better than lowly speculated.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 121.75 points, or 0.95 percent, to close at 12,982.10 points. All of the TSX index's eight main sub-sectors moved higher.

Statistics Canada reported Tuesday that real gross domestic product (GDP) grew 0.2 percent in December, after rising 0.3 percent in November. GDP grew 0.2 percent in the fourth quarter, following a 0.6 percent increase in the third quarter. Real GDP advanced 1.2 percent in 2015, about half the pace recorded in 2014.

Expressed at an annualized rate, real GDP rose 0.8 percent in the fourth quarter, a slowdown from 2.4 percent in the third quarter but still much better than what economists had been expecting. By comparison, real GDP in the United States advanced 1.0 percent in the fourth quarter.

While investors took in the surprisingly better off reading, the resources-linked Toronto market was also encouraged by rebounding oil. The West Texas Intermediate for April delivery moved up 65 cents to settle at 34.4 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for May delivery increased 24 cents to close at 36.81 dollars a barrel on the London ICE Futures Exchange.

TSX energy and mining sectors went up 2.02 percent and 2.46 percent respectively. Calgary-based Twin Butte Energy Ltd. rocketed 23.08 percent to 0.16 Canadian dollar (0.12 U.S. dollar) per share, while Perpetual Energy Inc. soared 18.18 percent to 0.065 Canadian dollar a share.

Financials saw a solid 2.17 percent hike as a group. Bank of Nova Scotia or Scotiabank, Canada's third-largest bank, reported a 5.1 percent rise in quarterly profit, helped by growth in its international banking business. Scotiabank sprinted ahead 3.17, or 5.79 percent, to 57.93 Canadian dollars a share.

Maple Leaf Foods Inc. reported a quarterly profit, compared with a year-earlier loss, helped by improved margins in its prepared meats business. Maple Leaf shares galloped 1.84, or 8.07 percent, to 24.65 Canadian dollars each share.

WestJet Airlines Ltd. has started talks with aircraft makers on replacements for its fleet of Boeing 767-300 planes, with delivery of the new planes expected by the end of this decade. WestJet shares dropped 16 cents, or nearly 1 percent, to 17.69 Canadian dollars per share.

Royal Bank of Canada reported that its Canadian Manufacturing Purchasing Managers' Index registered 49.4 in February, up fractionally from 49.3 in January, but below the neutral 50.0 threshold for the seventh month in a row. Nonetheless, the latest reading was the highest since August 2015, largely reflecting a softer decline in production levels during February.

Canada's economy contracted in the first two quarters of 2015, marking a technical recession as it was hit by the drop in the price of oil, a major export. The renewed downturn in oil prices has raised concerns growth could remain weak this year.

"We look for no improvement this year, although the better tone to end last year has prompted a mild upgrade for our 2016 call to 1.2 percent (from 1.0 percent)," said BMO economist Doug Porter.

The GDP reading was released as the Canadian federal government prepares a spring budget expected to contain billions worth of commitments -- such as infrastructure spending -- that it insists will help revive economic growth and create jobs. The budget date is March 22.

Lower final domestic demand and exports both contributed to the slower growth. Exports declined by 0.6 percent between October and December, but imports were down by almost four times that much. The falling Canadian currency was a factor in that, as Canadians became acutely aware of the Canadian dollar's diminished buying power during the period in question.

The loonie actually rallied Tuesday as growth exceeded Bay Street's low expectations, gaining almost half a penny to trade well above the 74 U.S. cents level before it closed at its highest point in three months.

The Canadian dollar was traded markedly higher at 0.7455 U.S. dollar, compared with Monday's closing rate of 0.7390 U.S. dollar. Enditem