By Sarah Pringle, MarketWatch
SAN FRANCISCO (MarketWatch) — Canadian stocks shot higher Tuesday on stimulus hopes and strengthening futures following the nation’s long holiday weekend, with the main equities benchmark rallying 2.18% in Toronto.
The S&P/TSX Composite Index added 252.39 points to settle at 11,848.95, led by a 4.15% surge in the metals and mining sector and a 4.11% advance in the materials sector to pace the Toronto market’s percentage gainers.
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“Friday was such a tremendous day for [commodity] prices, but Canada didn’t believe it,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services. “It’s remarkable the recovery oil has seen. … Finally Canada is waking up and someone put some smelling salts in the market today.”
Hopes for another round of quantitative easing and policy action also served as a driving force of Tuesday’s rally, he added. “You need to get that confidence into the [banking] system. That permeates into the stock market.”
On Wall Street, markets also fared well, with the S&P 500 Index /zigman2/quotes/210599714/realtime SPX +0.24% adding 8.51 points and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.13% up by 72.43 points to finish the session.
Though RBC strategist Kien Lim agreed that Tuesday’s gains stemmed from anticipation for further stimulus from the U.S. Federal Reserve, as well as a continuance of the rally following last week’s European summit, he maintained a wary outlook. “Global leading indicators that came out on Monday suggest that economic activity will slow in the coming months, yet there is a ‘risk-on’ sentiment to today’s market action.
“Despite the current rally we remain cautious on the market given the macro backdrop,” Lim added.
Still, further optimism came Tuesday with economic data, as the RBC Canadian purchasing-managers index rose to mark a nine-month high. The RBC PMI, which measures the health of the manufacturing sector, inched upward to 54.8 in June, from 54.7 in May.
Gains observed in June were the most significant since September 2011, with the most notable strides seen by midsize companies.
In corporate news, SouthGobi Resources Ltd. /zigman2/quotes/202113662/delayed CA:SGQ +28.57% said that Aluminum Corp. of China Ltd. /zigman2/quotes/208051344/composite ACH +3.11% , or Chalco, and Ivanhoe Mines /zigman2/quotes/207656050/delayed CA:IVN 0.00% plan to extend Chalco’s partial takeover bid, in which Chalco would acquire between 56% and 60% of SouthGobi’s common shares.
Following the announcement, shares of the coal miner jumped as much as 14.29%.
Class B shares of Bombardier Inc. /zigman2/quotes/208994866/delayed CA:BBD.B +13.95% tacked on 1.49% after announcing Saturday it had received an order for eight business aircraft, in a sale that will amount to $507 million.
The plane and train manufacturer also pressured leaders at the Rio+20 environmental summit to shift toward interconnected rail transportation for greater sustainability throughout urban areas.
Other notable movers among shares of commodities-oriented companies included a 13.76% rally for Nevada Copper Corp. /zigman2/quotes/207721511/delayed CA:NCU +4.55% and a 11.63% gain for Eastern Platinum Ltd. /zigman2/quotes/208644856/delayed CA:ELR 0.00%
Gold miners that made headway included Centerra Gold Corp. /zigman2/quotes/209218682/delayed CA:CG +0.74% , its shares surging 13.76%, and NovaGold Resources Inc. /zigman2/quotes/202931372/delayed CA:NG -1.89% , adding 10.3%.
In foreign-exchange trading, the Canadian dollar /zigman2/quotes/210561978/realtime/sampled USDCAD -0.2381% gained on its U.S. counterpart, which purchased C$1.0124 vs. C$1.0166 last Friday.