Resource Companies Dominating Today’s Move Up

An encouraging Chinese inflation release has Canadian investors seeing green.

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The Motley Fool

Closing in on the end of trading, the S&P/TSX Composite is poised to have its best day in sometime.  The Canadian market sits up 141 points for a 1.2% gain.

Four of the top five contributors on the day are resource oriented companies.  Most names in the Energy and Materials space are benefitting from a Chinese report that indicated inflation was lower than expected.  Muted inflation numbers mean Chinese officials face less pressure to introduce credit tightening policies to slow the economy.  Build on China, build on!

Checking in with a return on the day of more than 3%, Suncor Energy (TSX:SU,NYSE:SU) is currently today’s top contributor.  Suncor’s peer Canadian Natural Resources (TSX:CNQ,NYSE:CNQ) can also be found in the top 5 as both have benefitted from a move higher in the price of oil.  The price of the May WTI oil contract has moved ahead by $0.82 and stands at $94.19.  This 0.9% move up however is considerably lower than the 1.6% move that Brent crude has had on the day.

The other two resource names that are part of today’s top 5 are Goldcorp (TSX:G,NYSE:GG) and Teck Resources (TSX:TCK.B,NYSE:TCK), up 3.3% and 4.9% respectively.  The spot price of gold has made a strong move, up $13.50 or 0.8%, and Teck’s diversified stable of metals caught a bid on the Chinese inflation release.

The Royal Bank of Canada (TSX:RY,NYSE:RY) is the non-resource company that rounds out the top 5.  Royal’s shares are up 1.2% on the day.

The S&P/TSX Composite Index is loaded with resource and financial stocks.  Because of this, investors that rely on Canadian Index funds or ETFs severely lack diversification in their portfolio, opening them to undue risks.  We have created a special report that outlines an easy to implement strategy and 5 Canadian stocks that reduce the risks involved with passively investing in the Canadian market.  Click here now to receive “Buy These 5 Companies Instead of Following a Flawed Piece of Advice” – FREE!

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Fool contributor Iain Butler is short $32 July 2013 put options on Goldcorp, short $26 August 2013 put options on Teck Resources, and owns Teck shares outright as well.  The Motley Fool has no positions in the stocks mentioned above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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