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The close: TSX rebounds with global markets on earnings strength

Traders work on the floor of the New York Stock Exchange (NYSE) on Monday, Oct. 17.

Michael Nagle/Bloomberg

Canadian stocks rose with global market on positive earnings reports from some key multinational companies and signs that the U.S., the world's largest economy, is strong enough to withstand a gradual pace of monetary tightening.

The S&P/TSX Composite Index rose 1.07 per cent, or 155.73 points, to 14,752.25 in Toronto, its highest level in two weeks. The index shrugged off last week's declines amid better than expected results from Goldman Sachs Group Inc. and Johnson & Johnson. The Canadian equity benchmark is up 13 per cent this year, making it the top performing developed equity market in the world, ahead of the U.K. and New Zealand.

Nine of the index's 10 main industry groups ended higher, led by a 3.4-per-cent gain for raw-materials producers. Gold and silver are poised to climb by the time of the London Bullion Market Association Conference in October 2017, according to a survey of people attending this year's gathering, which ended Tuesday. Barrick Gold Corp. gained 2.9 per cent to reach its highest level in two weeks. Silver Wheaton Corp. gained 3.9 per cent.

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Financial services firms gained 0.9 per cent, led by Royal Bank of Canada, which is trading at its highest level since November 2014. Bank of Nova Scotia jumped 0.9 per cent to a monthly high. Bank of Canada Governor Stephen Poloz may push back his prediction for the economy to reach full output next year and keep interest rates unchanged at an interest-rate decision Wednesday.

Energy producers climbed 0.9 per cent following Monday's decline, on a rise in oil after the dollar weakened. Crude edged above $50 where prices are hovering after OPEC's decision to cut output last month. The S&P/TSX Energy index is 26 per cent higher this year and is at its highest level since June 2015.

A gauge of global equity markets climbed to a one-week high on Tuesday, lifted by rising commodity prices and a strong bounce in Europe, while solid corporate earnings helped drive share prices higher.

Wall Street rose after a raft of stronger-than-expected results from UnitedHealth Group Inc, Netflix Inc and Goldman Sachs Group Inc, among others.

UnitedHealth gained 6.9 per cent, Netflix soared 19 per cent and Goldman Sachs rose 2.2 per cent.

S&P 500 earnings are now expected have increased slightly in the third quarter, reversing forecasts for another quarter of profit declines, Thomson Reuters data showed.

It will be the first quarter since 2014 that both earnings and revenue for S&P 500 companies increased.

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"The markets are expecting an inflection point as we move from the third to the fourth quarter, and so what they will be parsing in management guidance is for a view that earnings turn positive in the fourth quarter," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.

MSCI's all-country world index of equity returns in 46 countries rose 0.99 per cent, while in Europe major stock indexes rose more than 1 percent.

On Wall Street, the Dow Jones industrial average unofficially rose 75.47 points, or 0.42 per cent, to 18,161.87. The S&P 500 gained 13.10 points, or 0.62 per cent, to 2,139.60 and the Nasdaq Composite added 44.01 points, or 0.85 per cent, to 5,243.84.

The pan-European STOXX 600 index rose 1.5 per cent to its highest level in nearly a week. However, the benchmark index is still down more than 6 per cent year to date.

The market was helped by a 2.8-per-cent rally in the STOXXEurope 600 Basic Resources index, the top sector gainer.

A report on U.S. consumer prices showed underlying inflation moderated slightly in September, indicating it may take longer than expected for inflation to reach the Federal Reserve's target of 2 percent.

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Fed Chair Janet Yellen said last Friday that the U.S. central bank could allow inflation to run above the target. The data may keep the Fed from raising interest rates in December as expected.

U.S. Treasury yields also fell in line with their UK counterparts on signs parliament will have to ratify Britain's exit from the European Union. British lawmakers are seen as less inclined to take a hard line on Brexit than Prime Minister Theresa May.

Benchmark U.S. 10-year Treasury notes fell 5/32 in price to yield 1.7485 percent.

MSCI's emerging market index rose 1.73 per cent, its biggest gain in more than three months, backed by the Fed's expected slower rate of tightening and the bump in commodities prices.

The dollar was off its seven-month high against a basket of major currencies, but was flat overall on the day at 97.870.

Oil prices steadied as the dollar gave up early gains and expectations of output curbs by the Organization of the Petroleum Exporting Countries lifted crude prices despite forecasts for a second straight weekly build in U.S. crude stockpiles.

Global benchmark Brent added 16 cents to settle at $51.68, while U.S. crude rose 35 cents to settle at $50.29 a barrel.

With files from Reuters

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