After losing more than 7% in the past two trading sessions, Toronto’s main stock index rose Tuesday with mining stocks leading the gains.
The S&P/TSX Composite Index vaulted 438.30 points, or 3.8%, to end the day at 12,109.30
The Canadian dollar recovered 1.50 cents to 102.08 cents U.S., after earlier today veering near parity with its U.S. counterpart for the first time since February.
"The rebound today is primarily driven by improvements in global markets, including base metal producer earnings, banks and fertilizers," CMC Markets analyst Colin Cieszynski said.
Canada relies on the U.S. for approximately 70% of its trade. China makes up roughly 8% of Canada’s trade, though the portion is growing.
China’s July inflation accelerated further to 6.5% from 6.4% in June, official data showed Tuesday. If China were to tighten monetary policy, then the country might not continue to import Canadian commodities at the same rate because it would be costlier for Chinese companies to borrow money.
Metals and mining issues gained as shares of mining company Silver Wheaton rose $1.44, or 4.4% to $34.55 after the company reported second-quarter earnings nearly tripled on higher sales.
Energy stocks also climbed while oil prices rose. Shares of Talisman Energy added 53 cents, or 3.5%, to $15.82.
Technology plays also strengthened while shares of BlackBerry maker Research In rebounded 82 cents, or 3.8% to $22.63 after reaching a five-year low Monday. Research In Motion stock is still far below its 2011 peak of $69.86.
Materials added strength as gold futures did likewise, exceeding the $1,750 U.S-an-ounce milestone as safety-seeking investors moved money to gold amid the global market insecurity
On things economic, Canada Mortgage and Housing Corporation reported this morning that housing starts unexpectedly rose 4.3% to 205,100 annualized units in July to build on the downwardly revised 1.7% increase to 196,600 annualized units seen in June.
The increase in the pace of homebuilding in July comes as a surprise, because market expectations were for a decrease to 194,500 annualized units. This represents the fastest pace of starts since April 2010.
ON BAYSTREET
The TSX Venture Exchange recovered 28.94 points to 1,711.23 while the Nasdaq Canada index picked up 24.46 points to 462.17
In Toronto, in stark contrast to Monday, all 14 subgroups gained ground, led by global base metals, surging 6.7%, metals and mining, up 5.2%, and information technology, 4.2% to the good.
ON WALLSTREET
In New York, stocks swung wildly Tuesday, after the Federal Reserve said economic conditions warrant exceptionally low interest rates until 2013 and risks to the economy have increased.
The Dow Jones Industrials added 429.92 points, or 4%, to 11,239.80
The S&P 500 progressed 53.07 points to 1,172.53, while the Nasdaq Composite Index advanced 124.83 points to 2,482.52
U.S. stocks have fallen 15% during the past two weeks, and Monday's beating was the most brutal thus far. Stocks posted their worst losses since the 2008 financial crisis Monday, in the aftermath of S&P's downgrade of the U.S. credit rating.
All three major indexes sank between 5% and 7% Monday, pushing the Dow below 11,000 for the first time since last November. The selloff, which amounted to a paper loss of about $1 trillion U.S, was worse than the 512-point drop stocks experienced just three trading sessions before
Bank stocks were among the hardest hit during Monday's slide -- with Bank of America shares tumbling 20%, after AIG said it is suing the bank for billions of dollars over mortgage security fraud.
But Bank of America's stock looked to recoup some of those losses Tuesday, with shares up 7%.
Financial stocks like JPMorgan Chase and American Express also rebounded, and Citi soared more than 6%.
Boeing, Alcoa and Pfizer were among the biggest gainers Tuesday -- all rising more than 2%. Losers included Cisco and General Electric, which both fell more than 2%.
After the closing bell, Dow component Walt Disney will head to the earnings stage. The media giant is expected to report a profit of 73 cents U.S. a share.
Economically speaking, in its latest monetary policy statement, the Federal Reserve left key interest rates unchanged, saying that deterioration in the labor market and slower-than-expected economic growth will require the central bank to keep rates "exceptionally low" until the middle of 2013.
A survey of investors conducted by investment firm Nomura before the Fed's announcement showed that 22% of market participants had expected the Fed to announce more quantitative easing to help prop up the economy.
Elsewhere, productivity of U.S. workers slipped 0.3% during the second quarter, after falling 0.6% the prior quarter. Labour costs rose by 2.2%.
The U.S. Treasury Department plans to sell $72 billion U.S. in bonds this week. Its first auction was held Tuesday, during which the government sold $32 billion in three-year notes.
The bid-to-cover ratio, a measure of demand, came in roughly in line with other recent three-year note auctions -- an indication that investors are not afraid to stash their money in Treasuries, even with the warning from S&P.
Prices on the 10-year Treasury note rose sharply, correspondingly lowering yields to 2.27% from Monday’s 2.34%. Prices and yields move in opposite directions.
Oil for September delivery dropped $1.76 to $79.55 U.S. a barrel
Gold futures for December delivery gained $29.80 to settle at $1,743 U.S. an ounce. Earlier, gold prices hit a record intraday high of $1,782.50 U.S. an ounce.
