Canadian Stocks Rise as Banks Boost GDP Forecasts

Strategic Insights -

Canadian stocks gained for the first time in three days, led by financial shares, as two of the country's biggest banks increased their gross domestic product (GDP) forecasts. Bank of Montreal and Royal Bank of Canada predicted the Canadian economy should grow faster than previously estimated, prompting a rise in the Standard & Poor's/TSX Composite Index. The boost in confidence was also attributed to a report that Belarusian Potash Co. will sell more fertilizer to Brazil this year, causing Potash Corp. of Saskatchewan Inc. to gain 1.6 percent.

Key Takeaways:

  • The Standard & Poor's/TSX Composite Index rose 19.19 points, or 0.2 percent, to 11,967.17.
  • Bank of Montreal advanced 0.8 percent after increasing its GDP estimate to 4.7 percent from 3.7 percent.
  • Royal Bank of Canada's first-quarter forecast for Canadian economic growth was revised to 4.6 percent annualized rate from 3.8 percent.
  • Economists in a Bloomberg survey doubt the Federal Reserve will raise rates before November.
  • The S&P/TSX has jumped 42 percent since the day before the U.S. Federal Reserve lowered its federal funds target rate to zero to 0.25 percent in December 2008.
  • Most economists believe the Canadian economy's recovery is progressing faster than previously thought.
  • Canada's largest banks, Bank of Montreal and Royal Bank of Canada, are optimistic about the country's economic growth.
  • Todd Johnson, associate portfolio manager at BCV Asset Management, stated that low interest rates make equities an attractive investment option.

Statistics:

  • 0.8 percent: Bank of Montreal's gain after increasing its GDP estimate.
  • 1.6 percent: Potash Corp. of Saskatchewan Inc.'s gain after a report on fertilizer exports.
  • 19.19 points: The S&P/TSX Composite Index's rise.
  • 0.2 percent: The S&P/TSX Composite Index's gain.
  • 11,967.17: The S&P/TSX Composite Index's closing value.
  • 42 percent: The S&P/TSX's gain since the U.S. Federal Reserve lowered its federal funds target rate in December 2008.
  • $190 million (C$190 million): The amount of capital that Todd Johnson oversees as an associate portfolio manager at BCV Asset Management.
  • C$190 million: The amount of capital that Todd Johnson oversees as an associate portfolio manager at BCV Asset Management.

Sources:

  • Globe and Mail newspaper: Cited in the article as providing information on Royal Bank of Canada's GDP forecast.
  • Bloomberg survey: Mentioned in the article as predicting the Federal Reserve's interest rate decision.
  • Euclid Infotech Pvt. Ltd.: Copyright holder of the article.