Stock markets moved sharply higher Wednesday, buoyed by hopes that more economic stimulus will be aimed at the Chinese economy and data suggesting an improving manufacturing sector in the world's third-largest economy.
Toronto's S&P/TSX composite index ran ahead 180.17 points to 7,811.79 The upward swing followed three days of losses that carved more than 500 points from the main index, sending it down to 2003 levels.
The TSX was supported by sharp rises in commodity stocks as investors hope for increased Chinese demand for oil and metals.
The base metals sector ran ahead with First Quantum Minerals up $1.89 to $33.30 while Equinox Minerals climbed eight cents to $1.51.
The TSX energy sector gained as EnCana Corp. gained $2.44 to $49.82 and Suncor Inc. advanced $1.72 to $26.73.
The TSX financial sector, which had dropped 7% this week in the wake of the AIG loss, was up today. Shares in Sun Life Financial were down $1 to $16.44 following reports that U.S. Hartford Financial Services Group Inc. is in talks to sell most of its life insurance unit to the Canadian insurer.
But Bank of Montreal climbed 64 cents to $28.28 and Royal Bank advanced $1.06 to $30.72.
Laurentian Bank reported that first-quarter net earnings rose to $25 million from $19.1 million a year ago. Its shares were down $2.45 to $27.90 as it also said its return on equity rose to 10%
The gold sector was the leading declining sector, as Barrick Gold Corp. declined $1.51 to $35.20.
Agnico-Eagle Mines Ltd. a Toronto-based gold producer, says it has raised its estimate of gold reserves by 8% to a record 18.1 million ounces after the company spent $72 million on exploration last year. Its shares were off $2.64 to $59.65.
In economic news, Tuesday’s Bank of Canada decision to cut interest rates to almost zero and consider extraordinary steps to boost credit raises new concerns that the country’s recession won’t be as mild and short as policy makers predicted.
Governor Mark Carney yesterday lowered the rate on overnight loans between commercial banks to 0.5% from 1% and said he may reduce it again. Canada’s economy shrank at a 3.4% annual pace in the fourth quarter, the most since 1991 and more than the 2.3% drop the bank had predicted.
The Canadian dollar gained 1.13 cents worth of strength, to 78.46 cents U.S.
BAYSTREET
Of the 13 TSX sub-groups, 10 were higher, headed by energy stocks, up 6.5%, followed by metals and mining, advancing 3.9% and financial stocks, up 2.6%.
Gold stocks were off 2.7% and materials were down 2.1%. Health-care stocks slid 1.3%
The TSX Venture Exchange was up 6.88 points to 830.95 while the Nasdaq Canada index zoomed 21.98 points to 408.36
ON WALLSTREET
The Dow Jones Industrials index leaped 149.82 points off its 12-year lows to 6,875.84, amid signs on improvement in China's economy and as federal officials unveiled details of President Obama's $75 billion foreclosure prevention plan. It was the end of a five-session losing streak for the blue-chip index.
The Standard & Poor’s 500 index had gained 16.53 points to 712.86, while the NASDAQ composite index advanced 32.73 points to 1,353.74, as China's National People's Congress prepares to convene its annual session tomorrow. The agenda is expected to focus on a four trillion yuan or $586-billion U.S. stimulus package and other measures to counter a deep slump.
Also helping sentiment were figures suggesting Chinese manufacturing, while contracting again in February, did so at a slower rate than in the previous month.
The government-sanctioned China Federation of Logistics and Purchasing reported today that its monthly survey of purchasing managers for more than 700 manufacturers - a key indicator - rose to 49 in February from 45.3 in January on a 100-point index where numbers below 50 show activity contracting.
Analysts warned that the market's advance today could be fleeting - and played down the significance of the Chinese numbers.
In company news, Costco Wholesale said its fiscal second-quarter profit fell 27% to $239.7 million U.S., partly on lower non-food sales and some deeper discounting, while results were further hurt by the stronger dollar. Its shares inched cents 29 cents higher to $40.98.
U.S. Bancorp said today its board of directors approved a plan to slash its quarterly dividend on common stock by 88% to five cents because of "uncertainty in the financial markets and a weakening economy."
Economically speaking, two days before the U.S. non-farms payroll report for February is released, the ADP Employment Report indicated that 697,000 jobs were lost in February. The consensus estimate called for 630,000 job losses.
Economists are looking for the Friday report to show job losses of 640,000 jobs last month.
Federal officials announced details of the President Obama's $75-billion foreclosure prevention plan and the program opened for business Wednesday.
The foreclosure fix aims to modify home loans so monthly payments are no more than 31% of monthly gross income. The plan will offer incentives to borrowers and loan servicers and investors to help struggling home owners make their payments.
Job market data released Wednesday showed continued weakness, but a mixed message about whether there's an improvement underway.
Payroll services company ADP said the private sector shed 697,000 jobs in February, much more than expected. But the outplacement group Challenger, Gray and Christmas said the number of planned job cuts announced in the month fell for the first time since December.
The two jobs reports serve as a preface for the government's February data due Friday.
The government's weekly supply report showed that crude stockpiles decreased by 700,000 barrels in the week ended Feb. 27, while analysts expected an increase of 2.2 million barrels.
As global equities rallied, government debt prices fell. The benchmark 10-year note was down 26/32 to 98 and its yield jumped to 2.99%. Bond prices and yields move in different directions.
The April crude contract in New York rose $3.68 to $45.33 U.S. a barrel.
The April bullion contract on the Nymex faded $6.90 to $906.70 U.S. an ounce.
