TSX rallies as RBC notches biggest gains in four years
By Fergal Smith
(Reuters) -Canada's main stock index rebounded on Thursday as Royal Bank of Canada reported stronger than expected earnings to round out a mixed results season for Canada's big six lenders, and U.S. data supported prospects of Federal Reserve interest rate cuts.
The Toronto Stock Exchange's S&P/TSX composite index ended up 173.73 points, or 0.79%, at 22,071.71, after it posted on Wednesday its lowest closing level in nearly four weeks.
"On the banks' side, it was the haves and have nots ... It has been a little bit more volatile in that sense this quarter," said Diana Avigdor, a portfolio manager and head of trading at Barometer Capital Management.
Royal Bank of Canada, which has the largest market capitalization of any stock on the TSX, said the investment banking environment looked promising as it surpassed profit expectations. The lender's shares rose 5.19%, the biggest advance since May 2020.
Canadian Imperial Bank of Commerce also beat profit expectations, helping to lift its shares 7.01%.
The financials sector rose 1.89%, while energy added 0.37% even as the price of oil settled 1.7% lower at $77.91 a barrel.
Oil and gas companies are "exhibiting good corporate discipline" by producing free cash flows, generating special dividends for shareholders and doing stock buybacks, Avigdor said.
Bond yields eased as the U.S. economy grew more slowly in the first quarter than previously estimated and a key measure of inflation ticked down, keeping the Fed on track to possibly begin cutting interest rates at least once before the end of the year.
The utilities sector, which includes many high-dividend paying stocks that could particularly benefit from rate cuts, advanced 1.51%. But technology was a drag, falling 1.84%.
It was pressured by a decline of 6.84% for the shares of Descartes Systems Group Inc after the company reported quarterly results.
(Reporting by Fergal Smith in Toronto and Khushi Singh in Bengaluru; Editing by Shreya Biswas)
