The Toronto stock market edged up slightly higher Wednesday, as traders awaited a policy update from the U.S. Federal Reserve.
The S&P/TSX composite index added 13.76 points to 15,069.65, pushed up by gold and info tech stocks. The Canadian dollar was down 0.05 of a cent to 92 cents (U.S.).
Markets are awaiting the conclusion of the Fed’s two-day policy meeting, where it’s expected the central bank will deliver its latest economic forecasts.
Most expect chair Janet Yellen to announce that the Fed will reduce its monthly bond buyback program by $10-billion-to $35-billion (U.S.) a month, as signs continue to emerge that the U.S. is on the right course for recovery. Markets will also be closely watching for any hints from Yellen on when the Fed might begin to raise short-term interest rates, as it comes closer to its target of two per cent inflation.
Data released on Tuesday showed that the U.S. consumer price index rose 0.4 per cent in May and was up 2.1 per cent over the past 12 months. Despite the surprising figures, most economists still don’t think the central bank will be quick to raise rates until July 2015. But there is always the possibility.
“(Governor) Mark Carney of the Bank of England surprised markets last week when he indicated that he may be more likely to start raising rates ahead of market expectations,” said Macan Nia, manager of the portfolio advisory group at Manulife Asset Management.
“The market will look to see if Yellen will communicate that sort of message.”
On Wall Street, the Dow Jones industrials dropped 42.85 points to 16,765.64, the Nasdaq faded 5.47 points at 4,331.76, and the S&P 500 index dipped 0.92 of a point at 1,941.07.
Meanwhile in corporate news, Ottawa has given approval to Enbridge to build the controversial Northern Gateway pipeline.
The federal government gave the green light late Tuesday for the $7-billion, 1,200-kilometre pipeline that will connect Alberta oil sands to the British Columbia coast, and open Canadian oil markets to overseas customers. Enbridge said it still has a lot to do following the approval, which came with 209 conditions. Opponents of the pipeline, including B.C. aboriginal groups, are vowing that it will never be built, despite the go-ahead from the federal government. Shares in Enbridge fell 89 cents to $51.07.
Nia said there isn’t a lot of reaction from energy and currency traders because the approval came with so many caveats.
“It was the market expectation that the federal government would approve,” he said. “But that’s just the first checkmark of a long list of checkmarks that Enbridge needs to check before it can even start construction on the pipeline and before any energy reaches from Calgary to the western port.”
It’s anticipated that if construction were to begin, the project would not be completed until at least 2020.
“There’s a lot of interest that has to align and that will be the challenge for Enbridge going forward,” said Nia. “Approval is a good first step but there are harder steps, I believe, that still have to be overcome.”
Despite the decline for Enbridge, the energy sector on the TSX was up 0.02 per cent, as the July crude contract on the New York Mercantile Exchange lost 48 cents to $105.88 (U.S.) a barrel.
The info tech sector gained 0.68 per cent, as BlackBerry Ltd. announced it was adding the Amazon Appstore in the next update to its operating system this fall. The move will give users of the BlackBerry 10.3 operating system easy access to thousands more of the most popular Android apps and games. The Waterloo, Ont., company is reporting its results on Thursday. Its shares gained 31 cents, or 3.55 per cent, to $9.05.
In Iraq, Islamic militants attacked the country’s largest refinery after capturing a large swath of northern territory in the past week, including the major city of Mosul. Gold was the leading advancer on the TSX with a 1.23 per cent gain as August bullion lost $1.30 to $1,270.70 an ounce. July copper was unchanged at $3.07 a pound.