The Toronto stock market registered a solid gain Wednesday morning with traders anxious to see what the Federal Reserve has to say about cutting back on its monthly asset purchases.
The S&P/TSX composite index ran ahead 80.12 points to 13,260.28 with gains spread across all sectors.
The Canadian dollar was down 0.42 of a cent to 93.83 cents US as the greenback strengthened ahead of an afternoon announcement from the Fed at the conclusion of its two-day meeting on interest rates.
U.S. indexes were mixed with the Dow Jones industrials up 41.29 points to 15,916.55, the Nasdaq slipped 6.62 points to 4,017.06 and the S&P 500 index climbed 1.33 points to 1,782.33.
Speculation has grown recently that a series of strong economic data may persuade the Fed to use this meeting to announce it is cutting back on its monthly purchases of US$85-billion of bonds. Those purchases have kept long term rates low and encouraged investors to put their money into stocks, which has in turn supported a strong rally on equity markets this year.
“Our economists are calling taper at this meeting a 50/50 decision,” said BMO Capital Markets senior economist Michael Gregory in a commentary.
Gregory said one of the best arguments for tapering now is that the Fed’s objective of quantitative easing when launched in September 2012, was to reduce unemployment, which at that time stood at 8.1 per cent.
“But now, based off of November data, unemployment stands at seven per cent. Furthermore, three of the last four jobs readings have been north of 200,000. This is the perfect time to celebrate (outgoing chairman Ben) Bernanke’s achievement and declare ‘mission accomplished!“’ The Fed makes its announcement at 2 p.m. EST, followed by a news conference by Bernanke at 2:30 p.m.
The gold sector led advancers, ahead 1.06 per cent as February gold inched up 40 cents to US$1,230.50 an ounce. Goldcorp (TSX:G) was ahead 43 cents to C$23.01.
March copper declined a penny to US$3.32 a pound while the base metals component rose 0.74 per cent. First Quantum Minerals (TSX:FM) gained 31 cents to C$17.38.
Financials were up 0.55 per cent as Manulife Financial (TSX:MFC) improved by 16 cents to $19.89.
The energy sector moved ahead 0.48 per cent with January crude on the New York Mercantile Exchange 48 cents higher to US$97.70 a barrel. Suncor Energy (TSX:SU) was ahead 47 cents to C$35.98.
Imperial Oil Ltd. (TSX:IMO) has applied for regulatory approval to build a new Aspen oilsands project northeast of Fort McMurray, Alta., which would cost an estimated $7-billion. The first phase of Imperial’s $12.9-billion Kearl oilsands mine north of Fort McMurray started up earlier this year. Imperial gained 15 cents to $45.52.
The telecom sector was up 0.27 per cent as Industry Minister James Moore says the government will move to prevent wireless providers from charging customers of rival companies more than they charge their own customers for domestic roaming. The CRTC is already investigating the issue of whether big wireless companies are charging their smaller Canadian competitors too much to use their networks. Rogers Communications (TSX:RCI.B) was up 26 cents to $47.43.
Elsewhere on the corporate front, a report from a federal review panel on Enbridge’s (TSX:ENB) proposed Northern Gateway pipeline, which would link the Alberta oil sands with a tanker port on the B.C. coast, will be released Thursday following more than a year of hearings. The highly-anticipated report on the controversial project will include the panel’s recommendations for the project but the final decision on whether the pipeline can go ahead rests with the federal government. Enbridge rose 50 cents to $44.45.
Canadian food company Saputo (TSX:SAP) will face just one rival in the home stretch to acquire Australia’s oldest diary processor. Bega Cheese is withdrawing from the race for Warrnambool Butter & Cheese. Saputo’s remaining rival is Murray Goulburn, which says its AU$9.50 cash offer is superior to Saputo’s, which has a range from AU$9 to AU$9.60 depending on how much stock the Canadian company acquires. Saputo rose 12 cents to $47.89.
In the U.S., FedEx Corp. posted net income that was 14 per cent higher than a year earlier, when superstorm Sandy hurt business. However, the second-quarter profit of $1.57 per share was lower than the $1.64 per share expected by analysts. Revenue rose three per cent to $11.4-billion, about what analysts were expecting.
FedEx raised its full-year profit outlook slightly and its shares declined 18 cents to US$138.91.
European bourses were higher as London’s FTSE 100 index rose 0.26 per cent, Frankfurt’s DAX gained one per cent while the Paris CAC 40 index was ahead 0.84 per cent.