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TSX Shrugs Off Mid-morning Setback, Ends On Firm Note

Despite a mid-morning setback and a subsequent long spell in negative territory, the Canadian stock ended on a firm note on Wednesday.

After a positive start, the market slipped into the red, but kept edging higher as the session progressed to eventually close well above the flat line.

News about stimulus announcements by Japan and the European Commission, and the Bank of Canada Governor's reiteration that the bank will use its tools to support the financial system amid continued uncertainty about the virus pandemic aided sentiment.

Investors were also digesting quarterly earnings reports from Bank of Montreal and Royal Bank of Canada, and other corporate news.

The benchmark S&P/TSX Composite Index ended up 123.91 points, or 0.82%, at 15,272.03, after scaling a low of 14,940.32 in the session.

The capped Financial Index surged up 3.2%, thanks to strong gains posted by key bank stocks. The Consumer Discretionary Index climbed up 2.28%.

Information technology stocks ended weak, although they recovered from intraday lows. Healthcare stocks were the other prominent losers.

Royal Bank of Canada (RY.TO) gained 4.8%. The bank said it earned $1.48 billion or $1.00 per diluted share for the quarter ended April 30, down from $3.23 billion or $2.20 per diluted share a year ago.

Bank of Montreal (BMO.TO) shares gained 0.85%. The bank reported a net income of $689 million for the second quarter, compared with $1.5 billion a year ago, as it increased the amount set aside for bad loans due to the coronavirus pandemic.

Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (CM.TO), Laurentian Bank (LB.TO) and Toronto-Dominion Bank (TD.TO) gained 3.5 to 5%. National Bank of Canada (NA.TO) climbed up 7.1% and CDN Western Bank (CWB.TO) ended 6.5% up. Manulife Financial Corp (MFC.TO) ended higher by about 2.4%.

Cenovus Energy (CVE.TO), Bombardier Inc. (BBD.B.TO), West Fraser Timber (WFT.TO), Magna International (MG.TO) and Canadian Pacific Railway (CP.TO) also ended on a high note.

Among the losers, Air Canada (AC.TO) declined nearly 7%, Barrick Gold Corporation (ABX.TO) and Hexo Corp (HEXO.TO) lost 3.4% and 3.1%, respectively.

Yamana Gold (YRI.TO) and B2Gold Corp (BTO.TO) lost 1.7% and 1.4%, respectively.

The Bank of Canada's Governor Stephen Poloz this morning raised hopes of more monetary stimulus from the bank. Speaking the Senate National Finance Committee, Poloz said there is "considerable uncertainty about the future course of the coronavirus pandemic" and reiterated that the central bank is prepared to augment the scale of any of its programs if needed to support the smooth functioning of the financial markets.

"If further monetary stimulus is required to meet our inflation targets, the bank has tools available to deliver that stimulus," he said.

Meanwhile, data released this morning showed the value of building permits in Canada declined 17.1% in April, from a donwardly revised 13.4% decline a month earlier. The forecast was for an 11% drop on building permits in April.

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