Toronto market, CIBC shares surge despite bad news
Toronto stocks were up more than 230 points at times Wednesday, lifted partly by a paradoxical enthusiasm for Canadian Imperial Bank of Commerce, which reported a 91 per cent drop in quarterly profit.
CIBC shares gained as much as $3.87 or 6.8 per cent to $60.93, even though the bank disclosed more big losses in little-understood markets involving structured credit, special-purpose entities, collateralized debt obligations, asset-backed commercial paper and other financial arcana.
'Yes, it wasn't as bad as expected.'— Dundee Securities bank analyst John AikenDespite the bad news, investors seemed relieved.
"Yes, it wasn't as bad as expected," Dundee Securities bank analyst John Aiken told CBC News.
"What it all boils down to with CIBC is the fact that the market was looking for writeoffs from the capital markets to be in the neighbourhood of $1.5 billion or more. They came in at $885 million," he said.
After tax, the $885 million hit cost the bank $596 million or $1.56 a share.
"Although it hurt earnings, it left the balance sheet in much better shape than everyone was expecting," Aiken said.
In the broad market, Toronto's S&P/TSX composite index was up as much as 233.61 or 1.8 per cent at 13,532.68.
S&P/TSX composite index
The financial stocks index was up as much as 2.9 per cent; energy stocks as much as 2.5 per cent, and mining stocks as much as 1.9 per cent.
Among individual gainers, Suncor was up as much as $2.04 at $61.19, Potash Corp. as much as $4.96 at $192.75 and Inmet Mining as much as $3.26 at $63.77.
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