The Toronto stock market was higher Wednesday with the focus on central banks as the Bank of Canada left its key rate unchanged and the chairman of the Federal Reserve reassured on economic stimulus.
S & P / TSX kompositindekset var op 81.1 point til 12,597.99.
The Canadian dollar was down 0.37 of a cent to 96.1 cents US as the Bank of Canada kept its key rate unchanged at one per cent and indicated it is in no rush to raise rates.
U.S. indexes were positive amid remarks from Federal Reserve chairman Ben Bernanke that the Fed could slow the pace of a key element of economic stimulus later this year if the economy strengthens. But Bernanke cautioned that the Fed wants to see substantial progress in the job market before scaling back its US$85 billion in monthly bond purchases.
The Dow Jones industrial gained 48.49 points to 15,500.34, the Nasdaq rose 16.87 points to 3,615.37 and the S&P 500 index gained 8.37 points to 1,684.63.
Bernanke also said in testimony before a congressional committee that the Fed’s timetable for reducing its bond purchases is not on a “preset course”. He also said the Fed could increase or decrease the amount based on how the economy performs.
“Overall, this was just another opportunity for Gentle Ben to calm the nerves of the bond market, and seems to be working in that direction,” said CIBC World Markets chief economist Avery Shenfeld.
Markets went through weeks of volatility after Bernanke first mentioned in late May that the Fed could start tapering its bond purchases, which have kept interest rates low and fuelled a rally on stock markets, later this year and wind it up by the middle of next year.
Stocks plunged at that time, even though Bernanke’s comments were generally in line with what economists had been expecting. Investors feared Bernanke’s comments meant the Fed was ready to let rates rise sooner and faster than they’d expected.
Since then, the Fed has tried to soothe nerves by stressing that the Fed won’t pull back on its stimulus unless the evidence was clear that the economy and the job market were improving as much as the Fed had forecast.
There were also major U.S. earnings report to digest. Bank of America earned US$3.6 billion or 32 cents a share in the quarter after payments to preferred shareholders, up 70 per cent from a year ago. The results were seven cents higher than analyst forecast and its shares were up 14 cents to $14.06.
Total revenue was $22.9 billion after stripping out one-time charges, up three per cent from a year ago and better than the $22.8 billion expected by analysts polled by FactSet.
After the markets closed Tuesday, Yahoo Inc. said it earned $331 million, or 30 cents per share, in the three months ending in June. That compared with net income of $227 million, or 18 cents per share, at the same time last year. Ex-items, earnings were 35 cents per share, a nickel above the average estimate among analysts surveyed by FactSet and its shares gained $1.22 to US$28.10.
On the economic front, U.S. builders started work on fewer homes and apartments in June. However, the slowdown wasn’t enough to suggest the housing recovery is faltering.
Developers began construction at a seasonally adjusted annual rate of 836,000 homes in June, nearly 10 per cent below May’s total of 928,000, which was revised higher.
Despite June’s decline, which was mainly centred on apartments, builders started work on 10 per cent more homes in June compared with a year earlier. Permits are 16 per cent higher than a year ago.
All TSX segments were positive and the base metals sector was ahead one per cent as September copper on the Nymex dipped three cents to US$3.16 a pound. First Quantum Minerals (TSX:FM) advanced 24 cents to C$16.02.
The industrials group also rose one per cent as Canadian National Railways (TSX:CNR) gained $1.38 to $105.61.
The gold sector was ahead about 0.9 per cent as August bullion gained $4.50 to US$1,294.90 an ounce. Barrick Gold (TSX:ABX) gained 24 cents to C$16.86.
Financials rose 0.6 per cent with Bank of Montreal (TSX:BMO) ahead 49 cents to $63.62.
Tech stocks also lifted the TSX as BlackBerry (TSX:BB) improved by 10 cents to $9.59.
The energy sector edged up 0.43 per cent while the August crude contract on the New York Mercantile Exchange up four cents to US$106.04 a barrel. Canadian Natural Resources (TSX:CNQ) was ahead 40 cents to C$33.33.
In other corporate news, movie threatre operator Cineplex Inc. (TSX:CGX) has made a conditional offer to buy EK3 Technologies Inc., a private company based in London, Ont., that provides in-store digital signage for major retailers and financial institutions. Cineplex says it would pay about $40 million up front plus the potential for performance-related payments that could push the total to $78 million. Cineplex gained 45 cents to $38.16.
Jovian Capital Corp. (TSX:JOV) said Tuesday it has entered into an acquisition agreement with Industrial Alliance Insurance and Financial Services Inc. Jovian said the life and health insurance company has agreed to pay $10.23 in cash or a 0.2386 portion of Industrial Alliance’s common share for all issued and outstanding shares of the Toronto-based wealth and asset manager. Jovian shares surged $3.09 or 43.83 per cent to $10.14.
European bourses were positive with London’s FTSE 100 index up 0.45 per cent, while Frankfurt’s DAX and the Paris CAC 40 climbed 0.6 per cent.