Canada's main stock market in Toronto rallied Wednesday as resources stocks were boosted by crude oil prices and a U.S. Fed rate decision.
The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 77.82 points, or 0.58 percent, to close at 13,478.13 points. Half of the TSX index's eight main sub-sectors moved higher. The most influential gainers on the index included First Quantum Minerals Ltd., up 10.72 percent to 8.47 Canadian dollars (6.45 U.S. dollars) per share, Encana Corporation, up 9.07 percent to 7.94 Canadian dollars, and Canadian Natural Resources, up 2.26 percent to 36.22 Canadian dollars. The TSX mining and energy groups were up 6.0 percent and 1.52 percent respectively.
Among gold plays, Barrick Gold Corp. jumped 5.01 percent to 19.93 Canadian dollars and B2Gold Corp. garnered 10.53 percent to 2.10 Canadian dollars a share. Toronto stocks and the Canadian dollar were going stronger after Qatar's top energy official confirmed OPEC member states and other major oil producers will meet in Doha on April 17 to discuss a freeze on oil output. Declining for the past 18 months as an oversupply of oil floods world markets, oil prices reversed their downward trend of the past two days on the news.
Brent crude soared above 40 U.S. dollars and West Texas Intermediate was up 5.8 percent at the close of trading to settle at 38.46 U.S. dollars a barrel. The U.S. Federal Reserve kept its benchmark interest rate steady in a range between 0.25 and half a percent on Wednesday, but cut its forecast for how the U.S. economy will perform in the near term.
"As expected the Federal Reserve kept interest rates at current levels but in an interesting turn of events they have downgraded their expectations of future rate hikes this year," said Michael J Smith, a Toronto currency expert at AFEX, a global non-bank provider of foreign currency services.
However, in deciding to keep rates where they are, the U.S. central bank did make some minor adjustments to its outlook. "Economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months," the Fed said, a change from January when the central bank noted that economic activity was "slowing."
In December, the Fed decided to hike interest rates off their emergency lows, deeming at the time the economy was almost ready to stand on its own two feet. Since then, however, the stock market and other economic indicators have fallen sharply, casting doubt on the Fed's confidence. Meanwhile, Statistics Canada reported that manufacturing sales rose 2.3 percent in January to 53.1 billion Canadian dollars (40.5 billion U.S. dollars), an all-time high.
Moreover, the agency said, foreign acquisitions of Canadian securities reached 13.5 billion Canadian dollars in January, mainly private corporate debt instruments. At the same time, Canadian investors reduced their holdings of foreign securities by 13.8 billion Canadian dollars, mostly equities.
The Canadian dollar reacted positively Wednesday to the Fed decision which caused a spike in world currencies and markets. By closing, the Canadian dollar was traded higher at 0.7621 U.S. dollar, compared with Tuesday's closing rate of 0.7484 U.S. dollar.
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