Canadian Stocks Surge on Strong Earnings and Economic Recovery

Strategic Insights -

The Canadian stock market experienced a significant rally, rising 90.79 points, or 0.8 percent, to 11,408.34, with a two-day gain of 2.8 percent, the largest since Dec. 2. The gains were driven by strong earnings reports from companies such as Whirlpool Corp. and Emerson Electric Co., which posted profits that exceeded analyst estimates. Royal Bank of Canada and other financial shares also recorded significant gains, with the latter adding 1.9 percent.

Key Takeaways:

  • 82% of companies in the S&P 500 Index in the U.S. and 71% in the S&P/TSX have surpassed the average analyst estimate, indicating a trend of strong earnings.
  • Companies such as Whirlpool Corp. and Emerson Electric Co. posted profits that exceeded analyst estimates, signaling an economic recovery.
  • The Canadian benchmark, the S&P/TSX Composite Index, fell 5.6% last month, the most since February 2009, but has now recovered with a two-day gain of 2.8%.
  • Weaker Dollar: The U.S. Dollar Index fell 0.3%, adding to its decline on news that the U.S. government estimated a record $1.6 trillion deficit for the year.
  • All eight Canadian publicly traded retail banks gained for a second day, with Montreal-based Laurentian Bank of Canada rising 3.7% to $40.23.
  • Corporate earnings continued to signal an economic recovery, following the U.S. announcement that gross domestic product expanded at the fastest pace in six years in the fourth quarter.

Statistics:

  • 2.8%: The two-day gain of the S&P/TSX Composite Index, the largest since Dec. 2.
  • 90.79: The points by which the composite index rose.
  • 11,408.34: The new total of the S&P/TSX Composite Index.
  • 82%: The percentage of companies in the S&P 500 Index in the U.S. that have surpassed the average analyst estimate.
  • 71%: The percentage of companies in the S&P/TSX that have surpassed the average analyst estimate.
  • $1.6 trillion: The estimated U.S. government deficit for the year.
  • 6.3%: The decrease in the Reuters/Jefferies CRB Commodity Price Index on a strengthening U.S. dollar.

Sources:

  • Euclid Infotech Pvt. Ltd.