TSX Settles Modestly Higher After Fed Minutes -- Canadian Commentary

(RTTNews) - Canadian stocks ended modestly higher for a fifth straight session on Wednesday, tracking rising global equity markets after the minutes of the Federal Open Market Committee showed officials to be divided over the timing of an interest rate hike. The gains were limited as commodity prices dived with crude oil prices plummeting over 6 percent after a surge in U.S. crude inventories last week.

Federal Reserve officials appear divided over the timing to hike interest rates, the minutes of the two-day Federal Open Market Committee meeting held in March showed.

The minutes showed several participants determined that the economic data and outlook were likely to warrant beginning the process of rate hike in June. However, others said conditions would not be appropriate to begin raising rates until later in the year due to the effects lower energy prices and the dollar's appreciation on inflation.

A couple of participants also suggested the economic outlook likely would not call for liftoff until 2016. The minutes indicated some division with regard to communications about the timing of the first rate increase.

However, Federal Reserve Chair Janet Yellen said she expects the central bank to raise interest rates this year and will not take any predetermined course in subsequent increases.

"I expect that conditions may warrant an increase in the federal funds rate target sometime this year," Yellen said, indicating a "rather gradual rise in the federal funds rate will be appropriate over the next few years."

Commodities lost ground following yesterday's rally, which is limiting the market's upside. Energy and gold stocks are among the weakest performers for the day.

Most markets in Europe have ended in negative territory, after what had been more of a mixed performance in early trade. The decrease in Eurozone retail sales and the unexpected drop in German factory orders weighed on investor sentiment. However, energy stocks remained in focus after oil giant Royal Dutch Shell agreed to acquire British oil and gas company BG Group.

Markets in the United States ended modestly higher, following the the release of the minutes of the Federal Reserve's latest monetary policy meeting. The lack of U.S. economic data also kept many investors on the sidelines.

The benchmark S&P/TSX Composite Index closed Wednesday at 15,213.60, up 24.76 points or 0.16 percent. The index scaled an intraday high of 15,249.52 and a low of 15,175.35.

On Tuesday, the index closed up 88.19 points or 0.58 percent, at 15,188.84. The index scaled an intraday high of 15,266.62 and a low of 15,115.25.

Gold futures ended lower with little or no major economic data from the U.S. on view, as investors awaited the Fed Reserve minutes for hints of an interest rate hike, which is expected to be delayed after a string of soft economic data from the U.S. recently.

The Gold Index shed 0.98 percent, with gold for April delivery dropping $7.50 or 0.6 percent to settle at $1,203.10 an ounce on the New York Mercantile Exchange Wednesday.

Among other gold stocks, Goldcorp Inc. (G.TO) shed 0.67 percent, Kinross Gold Corp (K.TO) tumbled 2.36 percent, Eldorado Gold Corp. (ELD.TO) fell 0.81 percent, Barrick Gold Corp. (ABX.TO) dropped 0.26 percent, and Yamana Gold Inc. (YRI.TO) surrendered 1.47 percent.

Crude oil plummeted over 6 percent after an official weekly oil inventory report from the Energy Information Administration showed crude stockpiles to have increased much more than expected last week.

A weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 10.9 million barrels in the week ended April 3, while analysts expected an increase of 3.2 million barrels. The report showed U.S. crude oil inventories at 482.4 million barrels end last week. Stockpiles are at its highest in about 80 years and have been climbing for the 13th straight week since the week ended January 9.

Gasoline stocks rose by 0.8 million barrels last week, with analysts anticipating a decline of 1.1 million barrels. Crude oil supplies at the delivery hub in Cushing, Oklahoma, jumped to 60.2 million barrels from 58.9 million.

The Energy Index dropped 2.27 percent, with U.S. crude oil futures for May delivery, the most actively traded contract, plummeting $3.56 or 6.6 percent to settle at $50.42 a barrel on the New York Mercantile Exchange Wednesday.

Among energy stocks, Canadian Oil Sands Limited (COS.TO) plunged 5.36 percent, Suncor Energy Inc. (SU.TO) dipped 0.36 percent, and Canadian Natural Resources Limited (CNQ.TO) shed 2.56 percent.

Crescent Point Energy Corp. (CPG.TO) dropped 3.58 percent, while Cenovus Energy Inc. (CVE.TO) shed 2.68 percent. Bonterra Energy (BNE.TO) fell 3.12 percent, while Legacy Oil + Gas Inc. (LEG.TO) dived 3.98 percent.

Encana Corp. (ECA.TO) dropped 3.65 percent, while Pacific Rubiales Energy Corp. (PRE.TO) plunged 6.67 percent. Precision Drilling Corp. (PD.TO) shed 4.01 percent.

The Diversified Metals & Mining Index added 1.18 percent, as First Quantum Minerals Ltd. (FM.TO) gathered 1.94 percent and Lundin Mining Corp. (LUN.TO) added 1.17 percent.

Teck Resources (TCK.B.TO) gained 0.92 percent, Capstone Mining (CS.TO) gained 0.76 percent, and Finning International (FTT.TO) inched up 0.08 percent. However, Sherritt International (S.TO) dropped 2.23 percent.

The Capped Materials Index shed 0.25 percent, mainly on declining gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) up 0.31 percent and Agrium Inc. (AGU.TO) gathered 0.13 percent.

The heavyweight Financial Index moved up 0.57 percent, as Bank of Nova Scotia (BNS.TO) dipped 0.13 percent and Bank of Montreal (BMO.TO) added 0.05 percent. Manulife Financial Corp. MFC.TO) gained 2.04 percent.

National Bank of Canada (NA.TO) added 1.64 percent, Royal Bank of Canada (RY.TO) added 0.76 percent. Toronto-Dominion Bank (TD.TO) gathered 0.20 percent, while Canadian Imperial Bank of Commerce (CM.TO) advanced 0.09 percent.

The Capped Health Care Index added 2.53 percent, as Extendicare (EXE.TO) moved up 0.40 percent, Valeant Pharmaceuticals International, Inc. (VRX.TO) gathered 3.82 percent, and Catamaran Corp. (CCT.TO) gained 0.27 percent.

The Capped Industrials Index moved up 0.29 percent, as Bombardier Inc. (BBD.B.TO) shed 1.89 percent, Canadian Pacific Railway Limited (CP.TO) gained 0.92 percent and Canadian National Railway (CNR.TO) advanced 0.34 percent.

Air Canada (AC.TO) gained 3.17 percent.

The Information Technology Index gathered 0.89 percent, as BlackBerry (BB.TO) inched up 0.17 percent and Constellation Software Inc. (CSU.TO) gained 3.34 percent. Sierra Wireless, Inc. (SW.TO) added 1.50 percent, while Descartes Systems Group Inc. (DSG.TO) gained 0.51 percent.

The Capped Telecommunication Index moved up 0.10 percent, with BCE Inc. (BCE.TO) up 1.07 percent, Rogers Communications Inc. (RCI.B.TO) gaining 0.42 percent, and TELUS Corp. (T.TO) added 0.73 percent. Manitoba Telecom Services Inc. (MBT.TO) fell 1.82 percent.

On the economic front, euro area retail sales declined in February for the first time in five months albeit in line with economists' expectations, data from Eurostat revealed Wednesday. Retail sales fell 0.2 percent from January's growth of 0.9 percent, which was revised from 1.1 percent reported earlier. The decline was in line with economists' expectations. It is the first fall since a 0.9 percent drop in September.

German factory orders unexpectedly dropped for a second straight month in February due to stagnation in domestic demand and a decline in foreign bookings, suggesting that activity in the biggest euro area economy remained subdued at the start of the year.

Factory orders dropped a seasonally-and-working-day adjusted 0.9 percent from January, data from the Economy Ministry showed, defying economists' expectations for a 1.5 percent gain in the volatile indicator.

Germany's construction sector expanded for a second straight month in March, as new orders increased for the first time in three years, results of a survey from Markit Economics showed Wednesday. The seasonally adjusted purchasing managers' index, or PMI, for the construction sector, rose to 53.3 in March from 53.1 in the previous month. The reading is the highest since last November.

France's trade deficit decreased unexpectedly in February, as exports rose faster than imports, figures from the customs office showed Wednesday. The foreign trade deficit shrunk to EUR 3.4 billion in February from EUR 3.7 billion in the previous month. The deficit was forecast to increase to EUR 3.8 billion.