Toronto's main stock index remained well ahead of Tuesday’s close by noon time ET Wednesday, extending gains from the previous session and even surmounting the 12,000-point mark, after the Bank of Canada and other major central banks announced moves to provide added support to the global financial system.
The S&P TSX Composite Index broke for lunch up 286.02 points, or 2.4%, to 12,018.52
Canada’s central bank is joining the Bank of England, the Bank of Japan, the European Central Bank, the U.S. Federal Reserve and the Swiss National Bank "to enhance their capacity to provide liquidity support to the global financial system."
The central banks are making it cheaper for banks to get U.S. dollar liquidity when they need it, starting next Monday. They are also taking steps to ensure banks can get ready money in any currency if market conditions warrant.
The Canadian dollar advanced 1.22 cents to 98.14 U.S. cents, on the news.
The reassurance from major central banks further enhanced positive sentiment arising from moves by China to ease lending and encourage growth.
China’s central bank announced that the amount of money China’s commercial lenders must hold in reserve will be cut by 0.5% of their deposits, effective Dec. 5. It was the first easing of monetary policy in three years.
The energy group ran up while Suncor Energy advanced $1.15 to $30.50.
The base metals component gained as metal prices also advanced sharply with the March copper contract ahead 13 cents to $3.52 U.S. a pound. Teck Resources rose $1.88 to $36.15.
The gold sector climbed while Barrick Gold Corp. was ahead $1.22 to $52.69.
Financials rallied strongly on the central bank action, as TD Bank improved by $1.27 to $70.90.
In corporate news, TMX Group says the Commissioner of Competition has "serious concerns" about the likely competitive effects of Maple Group’s proposed plan to buy the owner of the Toronto Stock Exchange.
TMX Group says the concerns are about competition in equities trading and clearing and settlement services in Canada. TMX shares gained $1.25 to $43.50.
On the economic calendar, Statistics Canada told us that Real Gross Domestic Product (GDP) hiked 0.9% in the quarter ending in September, after falling 0.1% in the second quarter. The gain was due largely to a jump of 0.3% in consumer spending. On a monthly basis, real GDP by industry increased 0.2% in September.
Elsewhere, the Industrial Product Price Index skidded 0.1% in October, while the Raw Materials Price Index tumbled 1.2%, in both cases due to decreases in the price of metals.
ON BAYSTREET
The TSX Venture Exchange prospered 33.42 points to 1,538.43, while the Nasdaq Canada index added 12.19 points to 400.60
All 14 Toronto subgroups raced ahead by noon. Metals and mining climbed 6.7%, global base metals took on 5.9% and materials gained 3.7%.
ON WALLSTREET
In New York, investors cheered and raced to scoop up stocks Wednesday, after the Fed said that it will act with other central banks to boost liquidity and support the global economy.
The Dow Jones Industrials skyrocketed 416.45 points, or 3.6%, to greet the middle of the day at 11,972.10
The S&P 500 increased 41.73 points, to 1,236.92, while the Nasdaq Composite ballooned 87.92 points to 2,603.42
For now at least, investors appear willing to ignore any possible parallels between today and November 2008, and just how precarious the state of financial system might be to warrant such a move by global bankers.
Bank stocks also rallied on news of the central banks' plans and helped investors ignore Tuesday evening's Standard & Poors' downgrade of big bank stocks. Shares of Goldman Sachs, Morgan Stanley, Citigroup and JPMorgan Chase spiked more than 4%. Bank of America, which hit its 52-week low Tuesday, also moved up 5.5%.
Shares of American Eagle rose after it released quarterly results before the opening bell.
On Tuesday, American Airlines' parent company, AMR, announced it had filed for Chapter 11 bankruptcy. The company's stock plunged more than 80% during trading Tuesday, but rose more than 50% Wednesday.
Adding to the markets' enthusiasm was more evidence that the U.S. economy could be picking up steam after two better-than-expected reports on private-sector jobs, housing, and Midwest manufacturing.
Economically speaking, a report from Automatic Data Processing showed that private sector employment grew by 206,000 jobs in November. Economists surveyed by Briefing.com expect private sector jobs to have increased by 125,000 for the month of November.
The Chicago Purchasing Managers Index, a report on manufacturing activity in the Midwest, came in well above the level that signals expansion in the sector.
The government will also release revisions of its third-quarter figures for productivity and unit labour costs. In the afternoon, the Fed's Beige Book will summarize economic outlooks from the 12 district banks across the country.
The price on the benchmark 10-year U.S. Treasury plummeted, pushing the yield up to 2.06% from 2.00% late Tuesday. Treasury prices and yields move in opposite directions
Oil for January delivery added $1.13 to $100.92 U.S. a barrel.
Gold futures for December delivery moved up $3.02 to $1,743.60 U.S. an ounce.
