Cenovus sparks best Canada stock gain in 14 months on oil rally

By Kristine Owram on 10/2/2017

TORONTO (Bloomberg) -- Encana Corp. and Cenovus Energy Inc. led Canadian stocks to their biggest monthly rise since July last year and analysts see more gains to come as oil moves higher and the economy posts its fastest growth in six years.

The 2.8% jump in September marks a reversal for the S&P/TSX Composite Index, which has lagged most of the developed world this year amid a slump in energy stocks. Even with last month’s gain, it’s still the third-worst performer among 24 developed market gauges tracked by Bloomberg, with a return of just 2.3% this year.

The S&P/TSX rallied in tandem with crude prices that had their biggest quarterly gain in more than a year, boosting oil-patch companies like Trican Well Service Ltd. and Precision Drilling Corp. Oil prices rose as U.S. refineries recovered from the effects of Hurricane Harvey, while OPEC and the International Energy Agency boosted demand forecasts.

Analysts have long said that a recovery in oil would be necessary for the under-performing TSX to rebound. Most strategists believe the index is poised for more gains as higher oil and economic growth topping 3% should offset concerns about rising interest rates. A pull-back in the Canadian dollar may also give stocks a lift. The loonie was little changed last month, after soaring almost 8% on the year versus the U.S. currency.

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