TORONTO – The Toronto stock market closed higher Wednesday with the help of broad gains across many of the key sectors, as traders swooped in to buy downbeaten stocks.
The S&P/TSX composite index rose 133.99 points to 14,754.06, with TSX gold, materials and energy sectors among the big movers.
The Canadian dollar gained 0.21 of a cent to 87.98 cents US following the Bank of Canada’s decision to keep its key interest rate unchanged, as was widely expected.
On the TSX, energy stocks rose 1.3 per cent as the January crude contract on the New York Mercantile Exchange settled 50 cents higher at US$67.38 a barrel.
Crude prices have plunged around 35 per cent since mid-summer because of lower demand and a glut of supply, due in large measure to greatly increased production in the U.S. Midwest. However, finding a floor on prices has proven challenging for the market.
“Probably, we are overdone here in terms of the selloff when we got down to the low $60 mark,” said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd.
He suggests a range of $70 to $80 is “a price to look at” as the market considers the direction of crude, but that returning to $100 for a barrel of oil is unlikely in the short term.
“The important question is if it bounces — how long will it stay there?” he added.
In its rate announcement, the Bank of Canada pointed to falling oil prices and high household debt as economic risks. The central bank said inflation climbed faster than expected due to the temporary effects of a lower Canadian dollar and price jumps in certain consumer sectors.
It was no surprise that it kept the trend-setting interest rate unchanged.
“The Americans are doing extremely well here in terms of economic performance, and we’re not doing as well as they are, so to even hint at us moving rates before them is a bit silly,” said Watson.
TSX gold stocks moved up 2.7 per cent as February bullion lifted $9.30 to close at US$1,208.70 an ounce, while March copper was down two cents at US$2.87 a pound.
On Wall Street, both the Dow Jones industrials and the S&P 500 index closed at record levels. The Dow moved up 33.07 points to 17,912.62, while the S&P gained 7.78 points to 2,074.33. The Nasdaq climbed 18.66 points to 4,774.47.
A report from the U.S. Labor Department said workers’ productivity increased at an annual rate of 2.3 per cent in the third quarter, which was a slightly faster pace than previously estimated while labour costs declined for a second straight quarter.
Payroll processer ADP also said U.S. companies hired at a solid clip last month, boding well for the government’s monthly job survey due out Friday.
Elsewhere on the TSX, investors gave a tepid response to the latest financial results from the banking industry, with the financials sector inching up 0.38 per cent.
Royal Bank (TSX:RY) said an improvement in its Canadian operations helped increase its fourth quarter profit by 11 per cent to $2.33 billion. Its adjusted earnings of $1.59 per diluted share came in a cent above the average estimate compiled by Thomson Reuters. Royal Bank (TSX:RY) shares rose 17 cents to $81.59.
The telecom sector was up 0.05 per cent after Bell announced plans for CraveTV, its answer to streaming competitors Netflix and Shomi. The service requires a TV subscription with Bell, Eastlink or Telus Optik TV and isn’t available to cord cutters. Shares of Bell parent BCE Inc. (TSX:BCE) rose six cents to $52.77.
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Note to readers: This is a corrected story. A previous version had incorrect figures for the TSX telecom and financial sectors.