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Dundee Industrial prepares to make splash with big IPO (Frank Gunn/THE CANADIAN PRESS)
Dundee Industrial prepares to make splash with big IPO (Frank Gunn/THE CANADIAN PRESS)

At midday: TSX advances in wake of Fed decision to taper stimulus Add to ...

The Toronto stock market was slightly higher Thursday, a day after markets responded enthusiastically to the Federal Reserve’s decision to modestly cut back on a key stimulus program. The Fed also emphasized that short-term rates aren’t going up any time soon.

The S&P/TSX composite index gained 17.74 points to 13,352.47 following a 155-point jump after the Fed said Wednesday it was cutting its US$85 billion of monthly bond purchases by $10 billion starting in January. Further cuts will depend on economic data, particularly jobless levels and inflation.

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The Canadian dollar erased early losses and was unchanged at 93.55 cents US. A stronger American currency had pushed the loonie down almost 3/4 of a US cent on Wednesday.

U.S. indexes moved lower after racking up big gains Wednesday with the Dow Jones industrials down 22.14 points to 16,145.83 after charging ahead almost 300 points.

“It’s a good news story,” said Sadiq Adatia, chief investment officer of Sun Life Global Investment, who thinks the Fed removed a major impediment to further market gains.

“They’ve actually opened the door for the next couple of months for us to really have no uncertainty about what’s going on in the market. And I think that provides some good opportunities for people to feel more comfortable about the markets.”

The Nasdaq declined 12.99 points to 4,057.07 and the S&P 500 index was 5.14 points lower to 1,805.51.

The latest instalment of quantitative easing has been around since September 2012 and kept long-term rates low and supported strong gains on many equity markets this year.

The tapering of asset purchases will be the first step toward winding down a program that has been in place since the 2008 financial crisis.

Most sectors were positive but the TSX was weighed down by a slide of almost two per cent in the much-battered gold sector as bullion prices resumed sliding after the Fed moved to cut back on its latest quantitative easing. QE had supported gold prices because of inflationary fears. But inflation is tame in many countries and data out earlier this week showed the consumer price index rising at an annual rate of only 1.2 per cent, significantly below the Fed’s inflation target of two per cent.

The February gold contract on the New York Mercantile Exchange fell $38.90 to US$1,196.10 an ounce. Gold prices are down 39 per cent so far this year while the TSX Global Gold sector has tumbled 49 per cent. On Thursday, Barrick Gold (TSX:ABX) fell 24 cents to C$17.84 and Goldcorp (TSX:G) faded 48 cents to $22.12.

Elsewhere on commodity markets, the base metals component moved 1.7 per cent higher while March copper slipped three cents to US$3.29 a pound. Teck Resources (TSX:TCK.B) climbed 51 cents to C$25.25.

January crude gained 44 cents to US$98.24 a barrel and the energy sector gained 0.5 per cent. Canadian Natural Resources (TSX:CNQ) was ahead 31 cents to C$34.73.

Tech stocks also lifted the TSX with CGI Group (TSX:GIB.A) ahead 81 cents to $37.86. BlackBerry (TSX:BB) rose nine cents to $6.56 a day before the smartphone maker releases its latest earnings.

Financials advanced with Manulife Financial (TSX:MFC) ahead 21 cents to $20.44.

A major decliner was auto parts company Martinrea International (TSX:MRE), which warned that fourth quarter net earnings will likely fall short of previous guidance. Among other things, it pointed to an issue with the financial reporting of one of its Canadian plants. It said “it appears at this point that the plant misreported its financial statements over a number of years dating back to 2005.” Its stock fell $1.49 or 15.8 per cent to $7.93

In other corporate news, retailer Target says that about 40 million credit and debit card accounts may have been affected by a data breach. The chain, which has 1,797 U.S. stores and 124 in Canada, said that customers who made purchases using their cards at its U.S. stores between Nov. 27 and Dec. 15 may have been exposed. Target shares declined $1.28 to $62.27.

A report from a federal review panel on Enbridge’s (TSX:ENB) proposed Northern Gateway pipeline through B.C. will be released later Thursday (at 4:30 p.m. EST) following more than a year of hearings. The final decision on whether the pipeline can go ahead rests with the federal government. Enbridge slipped 25 cents to $45.10.

European bourses also ran up sharply following the Fed’s announcement as London’s FTSE 100 index ran up 1.24 per cent, Frankfurt’s DAX rose 1.45 per cent and the Paris CAC 40 advanced 1.35 per cent.

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