TORONTO (CP) — The Toronto stock market soared to its biggest gain since late August on Wednesday, powered by higher commodity prices, particularly oil and gold, and a solid report on manufacturing.
The S&P/TSX index closed up 301.07 points or 2.24 per cent at 13,763.78, adding to a 109-point gain on Tuesday.
The big advance came as the October contract for benchmark crude oil shot up $2.56 to US$47.15 a barrel and December gold rebounded from its recent slide, up $16.40 to US$1,119.00 an ounce.
The gold and oil sectors were the leading advancers on the TSX, up 5.53 and 5.25 per cent respectively.
Elsewhere in commodities, December copper rose 2.5 cents to US$2.45 a pound, while October natural gas fell seven cents to US$2.66 per thousand cubic feet.
The Canadian dollar also advanced, rising 0.43 of a U.S. cent to 75.92 cents US.
The Fed will announce Thursday whether it will stand pat on interest rates — at historic lows near zero since the recession — or begin hiking them for the first time in almost a decade.
Opinion is divided on which way the U.S. central bank will go, amid uneven progress in the U.S. economic recovery. On Tuesday, the Fed issued a disappointing report on U.S. manufacturing, saying it fell .05 per cent in August, its biggest decline since January 2014 as American manufacturers continue to face a number of headwinds, including a high U.S. dollar.
There was much better news north of the border on Wednesday, with Statistics Canada reporting manufacturing sales rose 1.7 per cent to $52.2 billion in July, well above the consensus estimate of one per cent increase.
Ian Nakamoto, director of research at 3MACS, noted that the Bank of Canada has been counting on the lower Canadian dollar helping manufacturing exports.
“So if traders take that as positive, then (it’s) one of the reasons probably why the Canadian dollar is strengthening against the U.S. dollar,” he said.
However, he said, most eyes remain focused on the Fed.
“I think the rally here is people don’t expect an interest increase and so we have this continuing liquidity out there.”
However, he said the rally could be short-lived even if rates don’t go up, and that his preference would be for the Fed to increase by 25 basis points and “just say we’re going to go slow here in terms of data dependence.”
“If there is a sense that the economy is turning around and the Fed is putting its stamp of approval by increasing rates slightly, but not so quickly in future, I think the markets can continue to rally here.”
In corporate news, the world’s two biggest brewers could be joining forces after Anheuser-Busch InBev disclosed it has made a takeover approach to SABMiller PLC. A combination of the two would create a massive conglomerate worth roughly US$275 billion.
Brian McKenna, The Canadian Press
