TSX Ends Sharply Higher Tracking Global Markets -- Canadian Commentary

(RTTNews) - Canadian stocks soared to end sharply higher on Wednesday, tracking huge gains made by global equity markets as commodity prices surged, with investors anticipating the Federal Reserve to delay plans to hike interest rates in September.

Adding to its gains from yesterday, the Canadian market's sharp upswing was led by the financial sector, as well as on the uptick in gold and energy stocks with commodity prices surging.

The closely watched inflation data from the U.S. came in with some soft numbers on Wednesday. A Labor Department report earlier today indicated a modest drop in U.S. consumer prices in August, reflecting a steep fall in energy prices.

The employment and inflation numbers are seen as the two key factors that guides the Fed plans for its first interest-rate hike in nearly a decade. With the Fed meeting in progress, it seems likely the central bank will delay raising interest rates until at least December.

Markets in Europe ended in the green Wednesday, extending yesterday's rally on hopes that the Federal Reserve will stave off any rate hike, at least until December.

The strong rebound in the Chinese stock market also provided some relief, after steep declines of the past two sessions. China's Shanghai Composite index ended the session with a gain of 4.89 percent, marking its biggest single-day gain since August 27.

Markets in the United State ended firmly in positive territory, even as the Fed gears up to announce its latest policy decision tomorrow afternoon, which has also kept some investors on the sidelines.

In other economic news from the U.S., a National Association of Home Builders report showed homebuilder confidence continued to improve in September, with the housing market index reaching a near ten-year high.

The benchmark S&P/TSX Composite Index closed Wednesday at 13,763.78, up 301.07 points or 2.24 percent. The index scaled an intraday high of 13,776.69 and a low of 13,501.27.

On Tuesday, the index closed up 109.37 points or 0.82 percent, at 13,462.71. The index scaled an intraday high of 13,478.67 and a low of 13,365.31.

The Diversified Metals & Mining Index gained 2.13 percent as First Quantum Minerals (FM.TO) surged 6.36 percent, while Teck Resources Limited (TCK-B.TO) added 3.06 percent.

Lundin Mining Corporation (LUN.TO) gained 1.19 percent, Sherritt International Corp. (S.TO) gathered 1.03 percent, and HudBay Minerals Inc. (HBM.TO) moved up 0.90 percent.

The heavyweight Financial Index jumped 2.00 percent, as Royal Bank of Canada (RY.TO) gained 1.79 percent while National Bank of Canada (NA.TO) jumped 2.35 percent.

Toronto-Dominion Bank (TD.TO) rose 2.04 percent, Bank of Nova Scotia (BNS.TO) gathered 2.01 percent, and Bank of Montreal (BMO.TO) surged 2.37 percent.

Canadian Imperial Bank of Commerce (CM.TO) gained 1.32 percent after the company received approval from the Toronto Stock Exchanged for a normal course issuer bid.

Crude oil ended sharply higher after a report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have declined more than expected last week.

The Energy Information Administration this morning said U.S. crude inventories dropped by 2.1 million barrels last week. Expectations had been for an increase of 1.2 million barrels.

The Energy Index soared 5.25 percent, with U.S. crude oil futures for October delivery, the most actively traded contract, surging $2.56 or 5.7 percent, to settle at $47.15 a barrel on the New York Mercantile Exchange Wednesday.

Among energy stocks, Crescent Point Energy Corp. (CPG.TO) jumped 5.71 percent, Canadian Natural Resources Limited (CNQ.TO) surged 6.27 percent, Encana Corp. (ECA.TO) gained 5.36 percent and Cenovus Energy (CVE.TO) jumped 7.66 percent.

Canadian Oil Sands (COS.TO) soared 11.95 percent, Suncor Energy Inc. (SU.TO) gathered 4.16 percent, and Baytex Energy Corp. moved up 3.09 percent.

Gold futures ended sharply higher ahead of the Federal Reserve's monetary policy meet conclusion on Thursday, after the consumer-price report from the U.S. showed inflation to have trickled down, falling short of the Fed's target for a rate hike.

The Gold Index surged 5.52 percent, with gold for December delivery gaining $16.40 or 1.5 percent, to settle at $1,119.00 an ounce on the New York Mercantile Exchange Wednesday.

Among gold stocks, Yamana Gold Inc. (YRI.TO) surged 8.12 percent, Barrick Gold (ABX.TO) jumped 6.51 percent, Eldorado Gold (ELD.TO) soared 9.51 percent, and Kinross Gold Corp. (K.TO) surged 9.84 percent.

The Capped Materials Index jumped 3.79 percent, with Agnico Eagle Mines Limited (AEM.TO) up 6.88 percent, Agrium Inc. (AGU.TO) gained 1.06 percent, and Potash Corp. of Saskatchewan Inc. (POT.TO) up 1.60 percent. Franco-Nevada Corp. (FNV.TO) jumped 4.61 percent.

The Capped Health Care Index moved up 0.42 percent, as Valeant Pharmaceuticals International (VRX.TO) gained 1.55 percent, Extendicare Inc. (EXE.TO) shed 0.25 percent, and Concordia Healthcare Corp. (CXR.TO) dipped 1.59 percent.

The Capped Information Technology Index inched up 0.18 percent, as BlackBerry Limited (BB.TO) gathered 1.41 percent, and Descartes Systems Group (DSG.TO) fell 0.71 percent.

Constellation Software (CSU.TO) dropped 0.64 percent, Sierra Wireless (SW.TO) moved up 1.76 percent and Avigilon (AVO.TO) gathered 0.76 percent.

The Capped Telecommunication Index advanced 1.17 percent, as Rogers Communication (RCI-B.TO) gained 1.47 percent, BCE Inc. (BCE.TO) added 0.73 percent, and TELUS Corp. (T.TO) gathered 0.96 percent.

The Capped Industrials Index moved up 1.87 percent, as Bombardier (BBD-B.TO) added2.40 percent, Finning International Inc. (FTT.TO) jumped 4.11 percent, and Air Canada gathered 1.45 percent.

Wi-Lan (WIN.TO) dropped 0.37 percent, after its Advanced Microscopy subsidiary entered into a patent license agreement with Nikon Corporation.

On the economic front, Statistics Canada reported Wednesday morning that Canadian manufacturing sales climbed by 1.7 percent in July. Economists had expected an increase of only 1.0 percent. Results for May and June were also revised higher.

From the U.S., a Labor Department report on Wednesday showed a modest drop in U.S. consumer prices in August, reflecting a steep drop in energy prices. The consumer price index edged down by 0.1 percent in August after inching up by 0.1 percent in July. Economists expected prices to come in unchanged.

Homebuilder confidence in the U.S. continued to improve in September, a report from the National Association of Home Builders said Wednesday, with the housing market index reaching a near ten-year high. The NAHB/Wells Fargo Housing Market Index crept up to 62 in September from 61 in August, while economists had expected the index to come in unchanged.

Eurozone inflation slowed to 0.1 percent in August from 0.2 percent in July, final data from Eurostat showed Wednesday. The rate for August was revised down from 0.2 percent.

Inflation remains well below the European Central Bank's target of 'below, but close to, 2 percent over the medium term.'

Eurozone's labor costs increased at a slower pace in the three months ended June, figures from Eurostat showed Wednesday. Hourly labor costs climbed 1.6 percent year-over-year in the second quarter, following a 1.9 percent hike in the preceding month, revised down from 2.2 percent. In the fourth quarter last year, the rate of growth was 1.3 percent.

U.K. wages grew at the fastest pace in over six years and the unemployment rate declined in the three months to July, signaling a buildup of inflationary pressures, underpinned by household income.

Pay excluding bonuses increased 2.9 percent from the same period of last year, which was the fastest growth since early 2009, the Office for National Statistics reported Wednesday.

The unemployment rate was unchanged from the quarter ended April, but below 6.2 percent seen in the same period of last year.

UK households' finance outlook rebounded in September to the highest level in six months on lower inflation pressures, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday.

The seasonally adjusted Markit Household Finance Index rose slightly to 43.7 in September from August's eight-month low of 43.4.