Canada Stocks Edge Higher, Lenders Rise While Raw-Materials Drag

(Bloomberg) -- Canadian stocks edged higher, overcoming a drag from falling raw-materials shares, as Bank of Montreal led gains in lenders after its quarterly results beat estimates.

The S&P/TSX Composite Index rose 0.1 percent to 14,764.77 at 4 p.m. in Toronto, after rising as much as 0.3 percent, for the first back-to-back gains in two weeks. Trading volume Tuesday was 7.7 percent lower than the 30-day average. The S&P/TSX remains the second-best performing developed market in the world behind New Zealand.

Bank of Montreal, Canada’s fourth-largest lender, added 2.3 percent to reach a record as third-quarter adjusted profit was C$1.94 a share, beating the C$1.81 average estimate of 15 analysts surveyed by Bloomberg. Net income climbed 4.4 percent from year-ago figures as U.S. banking and capital markets trading revenue rose. Royal Bank of Canada rose 1.7 percent to a 20-month high.

Royal Bank is scheduled to report Wednesday, followed by Canadian Imperial Bank of Commerce and Toronto-Dominion Bank on Thursday. Bank of Nova Scotia is set for Aug. 30, and National Bank of Canada on Aug. 31. Financial services stocks increased 0.8 percent as only three of 10 main industries in the S&P/TSX advanced.

Barrick Gold Corp. and Goldcorp Inc. each drifted to a loss of 1.8 percent as raw-materials producers fell 1.1 percent, erasing a morning increase. Gold futures in New York ended the day with a 0.2 percent climb, after swinging between gains and losses, as investors remain uncertain of the Federal Reserve’s plans for interest rates this year. Fed Chair Janet Yellen is set to speak Friday at an annual symposium in Jackson Hole, Wyoming. Traders have priced in nearly 54 percent odds of a U.S. rate increase in December.

Raw-materials producers trimmed their climb this year to 56 percent, the biggest contributors to the rally in Canadian equities in 2016, as the top gainers among 10 industries in the S&P/TSX. The group is on track for the first annual advance in six years, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 22 percent in the same period, on pace for the strongest in seven years.

That’s boosted the Canadian equity benchmark to a 13 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 23.5 for the S&P/TSX, opening up a 15 percent premium over the S&P 500 Index.

Energy producers rose 0.2 percent Tuesday, reversing an earlier decline as oil bounced back on speculation Iran may be more willing to cooperate with other producers seeking to freeze output. Reuters reported Iran is sending “positive signals” it may support joint action, according to unidentified OPEC and industry sources.

TMX Group Ltd. lost 1.6 percent, capping a three-day slide of 7.5 percent that’s the worst since December. Three of Canada’s largest pension funds sold a combined 10 percent stake in the operator of the Toronto Stock Exchange for about C$312 million, cutting by almost half their holdings in the stock.