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CANADA STOCKS-TSX climbs to record high, boosted by railroad stocks

CANADA STOCKS-TSX climbs to record high, boosted by railroad stocks

reuters.com · 09/01/2021 16:30
CANADA STOCKS-TSX climbs to record high, boosted by railroad stocks

Adds investor quote and details throughout; updates prices

TSX ends up 106.64 points, or 0.5%, at 20,689.58

Industrials index rise 2.2% to record high

Information technology adds to recent gains, up 1.3%

Financials snap four-day losing streak

By Fergal Smith

- Canada's main stock index rose to a record high on Wednesday as railroad stocks rallied and investors continued to welcome the Federal Reserve's cautious approach to reducing stimulus.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 106.64 points, or 0.5%, at 20,689.58, a record closing level.

"We are getting broad market participation not just in Canada but across North America," said Kevin Headland, senior investment strategist at Manulife Investment Management.

"It seems like the Federal Reserve is going to remain cautious, which I think the market appreciates."

Fed Chair Jerome Powell told the central bank's annual Jackson Hole symposium on Friday that tapering of stimulus could start this year but its timing should not be construed as a signal for when interest rates will begin to rise. nL1N2PY1FI

The industrials index .GSPTTIN rose 2.2% to a record high, with Canadian Pacific Railway Ltd CP.TO up 5.1% and Canadian National Railway Co CNR.TO advancing 3.8% following the rejection of a voting trust structure that would have allowed the latter to buy Kansas City Southern KSU.N for $29 billion. nL4N2Q32O0

The two Canadian companies are competing to buy the U.S. railroad and Canadian Pacific initially fell 4.6% on Tuesday as investors priced in a greater likelihood of it having to make good on its own $25 billion offer for Kansas City. nL4N2Q23VE

But some investors expect the deal would be good for Canadian Pacific.

"We're seeing the continuation of the short cover from Canadian National today and more people picking up that the Canadian Pacific sell-off yesterday was overdone and it's probably going to be good news if they can win this deal," said Gregory Taylor, portfolio manager at Purpose Investments.

The information technology group added to recent gains, rising 1.3%, while the heavily weighted financial services sector snapped a four-day losing streak, ending 0.4% higher.

(Reporting by Fergal Smith; Additional reporting by Amal S and Sagarika Jaisinghani in Bengaluru; Editing by Cynthia Osterman)

((fergal.smith@thomsonreuters.com; +1 647 480 7446;))