CANADA STOCKS-Canada shares at 18-month high as financials, commodities rally
(updates prices)
By Shashwat Chauhan and Ismail Shakil
Dec 14 (Reuters) - Canada's main stock index extended gains on Thursday, with interest rate sensitive banking stocks leading the charge on bets that an expected drop in borrowing costs next year would boost credit growth and revive the housing market.
At 4:10 p.m. provisional close, the Toronto Stock Exchange's S&P/TSX composite index rose 149.35 points, or 0.72%, at 20,778.80, its highest close since June 8, 2022. Wall Street also edged higher.
The U.S. Federal Reserve's guidance on Wednesday that borrowing costs are expected to come down next year has turned the market sentiment globally, with investors piling into beaten down stocks.
"Today's bullish market action is a continuation from yesterday's key reversal, which was catalysed by the Federal Reserve meeting," said Brandon Michael, senior investment analyst at ABC Funds.
"With major economic data and central bank decisions now behind us, the path is clear for the market through year-end. We're now entering the Santa Claus Rally - a bullish seasonal period driven by investor optimism and higher stock prices. The market is now carrying significant momentum," Michael added.
On Friday, the Bank of Canada Governor Tiff Macklem is expected to deliver his final speech of the year, and investors would wait for clues for rate cuts in Canada.
Canada's housing market slowed further in November, with higher interest rates denting demand, data from the Canadian Real Estate Association showed. But CREA also noted that expectations of lower interest rate is expected to the spring market more active.
Rate-sensitive financial sub-index gained 1.2%.
Energy led gains, rising 1.6% on higher crude oil prices, while the materials sector, which houses Canada's major mining firms, jumped 1.2% as prices of most base and precious metals rallied.
Among individual stocks, Pembina Pipeline fell 1.5% after the company said it would buy Enbridge's interests in the Alliance Pipeline, Aux Sable and NRGreen joint ventures for C$3.1 billion ($2.30 billion).
Grocery chain operator Empire Co. Ltd slumped 11.2% after reporting a 6% drop in quarterly adjusted net earnings.
Cenovus Energy gained 3.1% after the company said it expects higher production from its U.S. refineries in 2024. (Reporting by Shashwat Chauhan in Bengaluru; Editing by Daniel Wallis)
