The Toronto stock market surged mid-afternoon Wednesday as U.S. Federal Reserve Chairman Ben Bernanke said the central bank will supply more stimulus to the U.S. economy if needed.
The S&P/TSX Composite Index ended Wednesday ahead 90.87 points to 13,324.94
The Canadian dollar was up 0.72 cents at 104.23 cents U.S.
Bernanke in his twice-a-year economic report to Congress said the Fed is prepared to provide additional stimulus if the current economic lull persists.
China’s economy expanded by 9.5% in the second quarter from a year earlier, down slightly from the 9.7% pace seen in the first quarter. That was above the 9.4% anticipated by economists and alleviated concerns of an abrupt slowdown.
Strong Chinese demand has also driven prices higher for commodities such as oil and copper, which in turn have supported the resource-heavy TSX.
The Chinese government has been trying to cool the world’s second-biggest economy in order to bring down high inflation which hit a three-year high in June. China has hiked interest rates five times since October and tightened controls on lending and investment.
Meanwhile, Italy’s finance minister sought to reassure nervous markets, saying the government’s package of austerity measures will be strengthened and passed by Friday. He said that Italy would speed reforms and austerity measures that seek to balance the budget by 2014.
The European government debt crisis has been a focus of investors amid ongoing worries about whether Greece will have to default on its massive debt. But worries about the crisis grew this week as markets demanded higher interest rates for the debt of Italy and Spain.
And on Tuesday, Ireland’s government bonds were downgraded by ratings agency Moody’s to junk status. The move puts Ireland back on the list of heavily indebted European countries in danger of default.
The American Petroleum Institute said late Tuesday that crude inventories rose 2.3 million barrels last week while analysts had predicted a drop of 2.1 million barrels.
At the same time, inventories of gasoline dropped 1.6 million barrels last week.
In the oil patch, Canadian Natural Resources climbed 26 cents to $39.58 and Suncor Energy rose nine cents to $38.07.
Metal prices advanced while the September copper contract on the Nymex headed one cent higher at $4.40 U.S. a pound. The base metals sector gained ground while Teck Resources advanced 52 cents to $49.38 and Quadra FNX Mining gained 43 cents to $14.37.
The gold sector was up as Barrick Gold Corp. improved by $1.16 to $46.62 while Goldcorp Inc. was ahead $1.29 to $52.12.
The financial component surged as TD Bank advanced 37 cents to $79.82.
Railroad stocks help boost the industrial sector with Canadian Pacific Railway ahead nine cents to $59.29.
The Canada Pension Plan Investment Board is teaming with a consortium of other investors to buy Kinetic Concepts Inc., a producer of wound care products, for $6.3 billion U.S, including debt. San Antonio, Texas-based Kinetic said the transaction is being made for $68.50 per share, which values the company at $4.98 billion. Kinetic shares rose $3.65 to $68.14 U.S.
Northgate Minerals Corp. will acquire Primero Mining Corp. in a $409-million U.S. deal that includes the San Dimas mine in Mexico. Northgate shares gained a penny to $2.82.
And OpenText Corp. shares were up $3.07 to $66.37 as it announced it has acquired Global 360 Holding Corp., a leading provider of process and case management solutions, for about $260 million.
Shares in Research In Motion Ltd. were down 52 cents to $27.00 after co-chief executive Jim Balsillie told the company’s annual meeting Tuesday that the BlackBerry maker’s foundation is strong. He highlighted the company’s plan to launch a new slate of smartphones that will secure the company’s future success.
Opti Canada Inc. has filed for CCAA creditor protection as its creditors agreed on a $375 million equity investment in the oilsands developer, which is undergoing a restructuring process. The TSX said Wednesday it is reviewing Opti’s common shares with respect to meeting listing requirements and said that the shares were suspended from trading immediately.
ON BAYSTREET
The TSX Venture Exchange gained 37.24 points to 1,989.13, while the Nasdaq Canada index improved 6.72 points to 561.01
In Toronto, 10 of the 14 subgroups ended the day higher. Gold zoomed 2.5%, while materials gained 2.2% and metals and mining picked up 1.5%.
The four laggards were weighed mostly by real-estate, off 0.4%, consumer discretionaries, down 0.2% and utilities, sliding 0.1%.
ON WALLSTREET
In New York, stocks snapped a three-session losing streak Wednesday after Federal Reserve Chairman Ben Bernanke reiterated that the central bank remains ready to provide additional stimulus.
The Dow Jones Industrials grew 44.73 point to end the day at 12,491.60, with Caterpillar, Merck & Co. and GE leading the advance.
The S&P 500 advanced 4.08 points to 1,317.72, and the Nasdaq Composite Index moved ahead 15.01 points to 2,796.92.
Earlier in the session, all three indexes had climbed more than 1%. The big driver behind Wednesday's gains was Bernanke.
After months of adamantly denying another round of stimulus, the Fed chief opened the door a crack during his semi-annual address to Congress.
Bernanke told lawmakers that the central bank is "prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate."
The possibility of additional stimulus offered some relief for investors who have been worried that the recent soft economic data could stall the recovery.
Wednesday afternoon, Fitch Ratings cut Greece's credit by three notches to CCC, sending the debt-ridden country's rating further into junk territory. The market had a muted reaction but the news served as yet another reminder of Europe's ongoing debt troubles
News Corp. was a big winner on both the S&P 500 and the Nasdaq. Shares spiked 5% after the company withdrew its bid for satellite TV company British Sky Broadcasting. The media giant said it plans to remain a long-term shareholder of BSkyB.
Late Tuesday, Electronic Arts announced it is buying mobile game maker PopCap Games for $750 million U.S. in cash and stock. Shares of the company fell 0.5% Wednesday
After the closing bell, fast food company Yum! Brands and hotel chain Marriott will report quarterly earnings. Shares of both were up 2%.
The price on the benchmark 10-year note regained earlier strength, dropping the yield to 2.89% from Tuesday’s closing of 2.91%. Treasury prices and yields move in opposite directions
Oil for August delivery ditched 38 cents to $97.82 U.S. a barrel.
Gold futures for August delivery rose $23.20 to settle at a record $1,585.50 U.S. an ounce.
Earlier Wednesday, the precious metal hit an intraday record of $1,588.90 U.S. an ounce.
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