TSX Ends At 2-Year High On Fed's QE Decision - Canadian Commentary

(RTTNews) - Canadian stocks ended at a more than two-year high Wednesday, after the U.S. Federal Reserve unexpectedly decided against scaling down its monetary stimulus of $85 billion monthly bond-buying program. The main index was driven mainly by gold and resource stocks, tracking global equity markets spurred by the Federal Reserve decision.

The Federal Reserve on Wednesday decided against tapering its massive bond-buying program in place since September last. Markets anticipated a $10 billion reduction in the monthly pace of the Fed's quantitative easing purchases, from $85 billion to $75 billion. Instead, the Federal Open Market Committee maintained its unprecedented support measures in the wake of a disappointing August jobs report that raised concerns about the pace of the U.S. economic recovery.

The S&P/TSX Composite Index closed Wednesday at 12,931.40, up 97.29 points or 0.76 percent. The index touched an intraday high of 12,958.88 and a low of 12,794.86.

The Diversified Metals & Mining Index jumped 2.83 percent, with First Quantum Minerals Ltd. (FM.TO) up 2.27 percent, while Osisko Mining Corp. (OSK.TO) surged 9.71 percent. Teck Resources Limited (TCK.B.TO) gained 3.19 percent and Lundin Mining Corp. (LUN.TO) added 2.80 percent.

The Capped Materials Index surged 5.07 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) shedding 0.87 percent and Agrium Inc. (AGU.TO) inching up 0.57 percent.

The Global Gold Index soared 8.42 percent, although gold futures for December delivery slipped $1.80 or 0.1 percent to close at $1,307.60 an ounce Wednesday on the Nymex. Nonetheless, following the Federal Reserve's decision to maintain its monetary stimulus, the precious metal soared $56.30 or 4.30 percent, at $1,365.70 an ounce.

Among gold stocks, Barrick Gold Corp. (ABX.TO) jumped 9.49 percent, while Yamana Gold Inc. (YRI.TO) climbed 8.18 percent. B2Gold Corp. (BTO.TO) jumped 12.45 percent, while Goldcorp Inc. (G.TO) surged 7.05 percent. Kinross Gold Corporation (K.TO) soared 8.30 percent.

Crude oil prices soared to end sharply higher Wednesday, after an Energy Information Administration weekly report showed crude oil inventories to have dropped much more than expected last week, even as the Federal Reserve unexpectedly decided against tapering its monetary stimulus of $85 billion monthly bond-buying program.

The Energy Index added 0.25 percent, with U.S. crude oil futures for October delivery surging $2.65 or 2.5 percent to close at $108.07 a barrel Wednesday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) gained 0.61 percent, Talisman Energy Inc. (TLM.TO) added 1.68 percent, and Suncor Energy Inc.(SU.TO) gained 1.14 percent. Enbridge Inc. (ENB.TO) edged up 0.21 percent.

The Financial Index surrendered 0.25 percent with Bank of Montreal (BMO.TO) slipping 0.13 percent and Manulife Financial Corp. (MFC.TO) dropping 2.12 percent. The Bank of Nova Scotia (BNS.TO) dipped 0.10 percent, while Toronto-Dominion Bank (TD.TO) fell 0.31 percent. Royal Bank of Canada (RY.TO) edged down 0.08 percent.

The Information Technology Index shed 0.71 percent, with BlackBerry Limited (BB.TO) down 2.21 percent.

The Capped Industrials Index gained 0.36 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) dropping 3.23 percent.

In economic news, housing starts in the U.S. rose less than anticipated in August, with building permits also registering an unexpected drop, a report from the Commerce Department showed Wednesday. Housing starts in the U.S. rose 0.9 percent to an annual rate of 891,000 in August from the downwardly revised July estimate of 883,000. Economists expected housing starts to climb to 915,000 from the 896,000 originally reported for the previous month.

Meanwhile, building permits, an indicator of future housing demand, tumbled 3.8 percent to 918,000 in August from the upwardly revised July rate of 954,000. Economists expected permits at 950,000 from the 943,000 originally reported for July.

From Europe, Bank of England policymakers unanimously decided to maintain quantitative easing unchanged earlier this month, as economic recovery gains steam even in the absence of additional stimulus. All the nine members of the Monetary Policy Committee led by Governor Mark Carney voted to retain the size of asset purchase program at GBP 375 billion on a consensus that more stimulus was inappropriate.