Loonie climbs to highest level in 2016; TSX advances on mixed commodities

TORONTO – Investors continued to ride a wave of positive sentiment following the latest comments from the U.S. Federal Reserve, with the Toronto stock market advancing for a third straight session Wednesday and the Canadian dollar climbing to its highest level of the year.

The S&P/TSX composite index added 77.75 points to 13,503.98, helped by gains in the financials and real estate sectors.

The loonie also continued to strengthen, rising 0.59 of a U.S. cent to 77.13 cents US, a day after Fed chairwoman Janet Yellen said the central bank will proceed with caution on any interest rate hikes this year.

The dovish comments in which the Fed reitereated its go-slow approach on interest rates weighed on the U.S. currency and helped buoy commodity markets.

The last time the Canadian dollar was at this level was in October 2015.

“(The comments are) taking some pressure off the U.S. dollar,” said Michael Greenberg, a portfolio manager at Franklin Templeton Solutions.

“In the last little while, it has really helped commodities, and commodity-related currencies like the Canadian dollar.”

Commodities were mixed as the May contract for North American benchmark crude oil was up four cents at US$38.32 a barrel, while May natural gas added two cents to US$2.00 per mmBtu. June gold fell $8.90 to US$1,228.60 an ounce and May copper slipped two cents to US$2.19 a pound.

Low interest rates have helped fuel strength in equity markets since the so-called Great Recession, keeping money flowing into equity markets.

The Dow Jones industrial average was up 83.55 points at 17,716.66, while the broader S&P 500 added 8.94 points to 2,063.95. The Nasdaq rose 22.67 points to 4,869.29.

In economic news, payroll processor ADP reported that U.S. companies added 200,000 jobs in March, down from 242,000 the previous month but in line with estimates by economists.

The figures suggest the U.S. economy is continuing to generate steady hiring despite worries that growth slowed in the first three months of this year, held back by weak overseas growth and cautious consumers.

Among stocks doing well was Norfolk Southern (NYSE:NSC), up $1.95 or about two per cent at US$84.75 after saying it was open to a possible sale to Canadian Pacific (TSX:CP). The freight railway said a deal would require Canadian Pacific to offer a better price and regulatory approvals.

Meanwhile, Vancouver-based yoga-wear maker Lululemon Athletica (Nasdaq:LULU) shot up nearly 11 per cent to US$67.80 after reporting strong fourth-quarter sales.

Shares in Dollarama Inc. (TSX:DOL) climbed more than seven per cent, or $6.17, to $88.91 after the company reported its latest results and its chief executive said he was turning over the role to his son.

— With files from The Associated Press

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