Canadian stocks settled sharply higher Thursday, led mainly by gold and mining stocks as investor sentiments soared after the U.S. Federal Reserve announced the much anticipated new quantitative easing measures to stimulate growth in the world's largest economy.
The Federal Reserve's new steps to stimulate the sluggish U.S. economy include plans to buy $40 billion of agency mortgage-backed securities each month, starting Friday. The move makes the U.S. treasuries even less lucrative, with the Fed hoping cash-rich investors get off the sidelines to purchase consumer goods, riskier assets and homes.
The central bank is expected to buy bonds worth $23 billion in September, and will spend up to $40 billion every month until the U.S. jobs market shows sustained improvement. The open-ended nature of the plan means the Fed will likely spend about $500 billion over the next twelve months.
In addition to embarking on a third round of quantitative easing, the Fed also extended its vow to keep interest rates at rock-bottom rates until mid-2015. Policy makers have also decided to keep in place the Operation Twist program that swaps short-term bonds for longer-term assets.
On a low, the weekly initial jobless claims in the U.S. rose more than expected, although unemployment rate dropped to 8.1 percent from 8.3 percent. Officials attribute the increase in jobless claims partly to the impact of Hurricane Isaac, as major storms often delay unemployment filings.
The S&P/TSX Composite Index closed Thursday at 12,360.16, up 127.54 points or 1.04 percent. The index touched an intraday high of 12,366.04 and a low of 12,194.21.
The Global Gold Index surged 3.85 percent, with gold futures for December delivery soaring $38.40 or 2.2 percent to close at $1,772.10 an ounce Thursday on the NYMEX.
The Capped Materials Index climbed 3.02 percent, with fertilizer maker Potash Corporation of Saskatchewan Inc. (POT.TO) gaining 0.73 percent.
Among gold stocks, Barrick Gold Corp. (ABX.TO) climbed 4.05 percent, Goldcorp Inc. (G.TO) jumped 4.74 percent, Yamana Gold Inc. (YRI.TO) moved up 4.94 percent, Eldorado Gold Corp. (ELD.TO) gathered 3.68 percent, and Kinross Gold (K.TO) moved up 2.68 percent.
The Metals & Mining Index climbed 2.52 percent, with Teck Resources Limited (TCK.B.TO) gaining 2.68 percent and First Quantum Minerals Ltd. (FM.TO) moving up 3.17 percent. Lundin Mining Corp. (LUN.TO) gained 0.80 percent, while Osisko Mining Corp. (OSK.TO) gathered 3.64 percent. Silver Wheaton Corp. (SLW.TO) gained 4.92 percent.
The Energy Index gained 1.49 percent, with U.S. crude oil futures for October delivery surging $3.70 or 1.3 percent to close at $98.31 a barrel Thursday on the NYMEX.
Among energy stocks, Suncor Energy Inc. (SU.TO) gained 1.72 percent, Talisman Energy Inc. (TLM.TO) was up 1.16 percent, Canadian Natural Resources Limited (CNQ.TO) gained 2.69 percent, and Encana Corp. (ECA.TO) was up 1.57 percent. Niko Resources (NKO.TO) gained 17 percent, while Petrominerales (PMG.TO) dropped 1.71 percent.
The Financial Index moved up 0.69 percent, led mostly by Manulife Financial Corp. (MFC.TO) surging 4.84 percent. Royal Bank of Canada (RY.TO) gained 0.61 percent, Bank of Nova Scotia (BNS.TO) edged up 0.41 percent, and Toronto-Dominion Bank (TD.TO) was up 0.20 percent.
Transportation systems maker Bombardier Inc. (BBD.A.TO, BBD.B.TO) gathered 2.70 percent.
The Information Technology Index dropped 1.27 percent, with smartphone maker Research In Motion Limited (RIM.TO) shedding 0.96 percent.
In other corporate news, information services provider MacDonald Dettwiler (MDA.TO) dived 5.89 percent after confirming the receipt of a request for additional information from the U.S. Department of Justice in connection with its proposed acquisition of Space Systems/Loral Inc.
Integrated tour operator Transat A.T. Inc. (TRZ.A.TO) skyrocketed nearly 20 percent after reporting a swing to profit in third-quarter, with a profit of C$9.4 million or C$0.25 per share compared to a loss of C$2.8 million or C$0.07 per share last year.
Empire Co. Ltd. (EMP.A.TO) posted improved first quarter net earnings of C$108.9 million or C$1.60 per share versus C$89.2 million or C$1.31 per share last year. The company declared a quarterly dividend of 24 cents per share. The stock was up 0.82 percent.
In economic news Statistics Canada said the New Housing Price Index (NHPI) rose 0.1 percent in July, following a 0.2 percent increase in June. On a year-over-year basis, the NHPI rose 2.3 percent in the 12 months to July, following a similar year-over-year increase the previous month. The main contributor to the advance was the combined metropolitan regions of Toronto and Oshawa.
In economic news from the U.S, the Labor Department said initial jobless claims rose to 382,000 in the week ended September 8, from the previous week's revised figure of 367,000. Economists expected jobless claims to edge up to 370,000 from the 365,000 originally reported for the previous week.
Separately, the Labor Department said its producer price index surged up by 1.7 percent in August following a 0.3 percent increase in July. Economists had expected the index to increase by 1.4 percent. Excluding the jump in energy prices as well as a notable increase in food prices, the core producer price index edged up by 0.2 percent in August after rising by 0.4 percent in July.
From the eurozone, the Swiss National Bank has decided to leave the minimum exchange rate unchanged at CHF 1.20 per euro as expected by economists. The central bank also retained the target range for the three-month Libor rate at 0.0-0.25 percent.
by RTT Staff Writer
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