Canadian shares rallies after the Bank of Canada cut interest rates for a second time this year due to the impact of slumping oil on the world’s eleventh-largest economy.
The benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) rose 0.7 percent to 14,696.43 at 12:30 p.m. in Toronto. Eight out of ten share groups were in the positive territory.
The Bank of Canada cut its key interest rate by a quarter percentage point to 0.5 percent, saying an unexpected economic contraction throughout the first half of the year had added to excess capacity and put downward pressure on inflation.
Financials, the index's most heavily weighted sector, rose 0.6 percent. Royal Bank of Canada (TSE:RY), which has the heaviest weighting in the index, gained 0.5 percent to C$77.29. Toronto-Dominion Bank (TSE:TD), the second-largest bank by market value, added 1 percent to $52.70.
The energy sector, the main index's second most heavily weighted group, fell 0.6 percent as oil, Canada’s largest export, headed lower.
Suncor Energy (TSE:SU), Canada's largest oil sands producer, gained 0.8 percent to C$35.30. Enbridge (TSE:ENB), Canada's largest pipeline company, rose 1.1 percent to C$58.84.
On the New York Mercantile Exchange, August West Texas Intermediate crude fell 1.5 percent to $52.23 a barrel.
The materials sub-index, which includes mining shares, slid 0.2 percent as gold prices fell to four-month lows. Goldcorp (TSE:G), Canada’s largest gold miner by market value, slipped 0.5 percent to C$20.53. Barrick Gold (TSE:ABX), the second-largest, dropped 0.6 percent to C$12.52.
Spot gold was down 0.6 percent at $1,147.43 an ounce, while U.S. gold futures for August delivery were down $7.30 an ounce at $1,146.30.
Corus Entertainment (TSE:CJR.B) retreated 6.4 percent to C$15.40 after the communications and entertainment company reported what it called disappointing third-quarter results.
Cogeco Cable’s (TSE:CCA) sank 3.8 percent to $69.78 even as its revenue rose by 4 percent to C$516.4 million in the third quarter. Earnings were C$1.30 a share, up from 72 Canadian cents a year earlier.
Extendicare (TSE:EXE) advanced 5.3 percent to C$8.51. Oxford Park Group has purchased more than a 5 percent stake in the company in a bid to influence the long-term care provider’s strategy and bolster its share price.
The junior S&P/TSX Venture Composite Index (CVE:OSPVX) edged down 0.1 percent to 644.34 at 12:39 p.m. in Toronto.
In economic news, Canadian factory sales rose slightly less than expected in May from April, edging up 0.1 percent on aerospace and petroleum and coal products, Statistics Canada said today.
Meanwhile, sales of existing homes in Canada fell in June from May as a decline in sales in Ottawa and Montreal outweighed increases in the Toronto area, but national prices continued to rise, the Canadian Real Estate Association said today.
In the U.S. market, shares rose today after Federal Reserve Chairwoman Janet Yellen reaffirmed her view that interest rates could rise this year as the economy improves. The S&P 500 (INDEXSP:.INX) added 0.2 percent to 2,112.60 at 11:41 a.m. in Toronto. The 30-company Dow Jones Industrial Average (INDEXDJX:.DJI) inched up 0.1 percent to 18,072.88, while the tech-heavy Nasdaq Composite (INDEXNASDAQ:.IXIC) rose 0.3 percent to 5,120.07. Most followed shares included Celgene, PayPal, LinkedIn, Yum! Brands, Cummins, BofA, BlackRock, Delta Air, CSX, and Allegheny.