TSX Ends Higher After Fed Statement -- Canadian Commentary

(RTTNews) - Canadian stocks rallied to end higher for a third straight session on Wednesday, after U.S. Federal Reserve in its policy statement indicated the much-hyped interest rate hike will not come about soon.

Investors viewed the Fed statement as dovish regarding the outlook for interest rates, after the central bank indicated economic growth as having moderated somewhat and unlikely to raise interest at its April meeting.

Energy stocks were among the star performers, after crude oil prices jumped following the Federal Reserve announcement of its monetary policy.

The Federal Reserve on Wednesday backed away from its pledge to be "patient," a strong signal that the central bank will hike interest rates in July or September. The move to remove the "patient" phrase came despite concerns about the rapid rise in the U.S. dollar, which touched 12-year highs against the euro earlier this week.

Nonetheless, Fed Chair Janet Yellen said the central bank is not 'impatient' to raise rates and has not decided on the timing of the first rate hike. She said a June rate hike cannot be ruled out, but the slight downgrade in the economic outlook means that tightening may pushed out until the second half of the year.

Full-year 2015 US gross domestic product (GDP) projections were lowered to to 2.3 percent to 2.7 percent from a range of 2.6 percent to 3.0 percent in December.

Today's vote was unanimous, keeping interest rates at zero, where they have been since December 2008. The Fed said a rate hike in April is unlikely and a slight downgrade in the economic outlook means a June rate hike may now be off the table.

The U.S. equity markets also ended in positive territory after the Federal Reserve's monetary policy announcement this afternoon.

Markets in Europe turned in a mixed performance Wednesday. Greece reportedly frustrated its main creditors on Tuesday by refusing to update eurozone peers on its reform progress at a scheduled teleconference. Meanwhile, the U.K. jobless rate declined and the employment rate hit the highest level since 1971.

The benchmark S&P/TSX Composite Index closed Wednesday at 14,962.24, up 63.71 points or 0.43 percent. The index scaled an intraday high of 15,028.01 and a low of 14,825.18.

On Tuesday, the index closed up 35.77 points or 0.24 percent, at 14,898.53. The index scaled an intraday high of 14,922.09 and a low of 14,722.47.

Gold futures turned higher just before close and ahead of the Fed announcement on Wednesday, having traded lower for most of the session.

The Gold Index jumped 3.08 percent, with gold for April delivery gaining $3.10 or 0.3 percent to settle at $1,151.30 an ounce on the New York Mercantile Exchange Wednesday.

Among gold stocks, Kinross Gold Corp (K.TO) jumped 4.21 percent, Eldorado Gold Corp. (ELD.TO) gained 2.35 percent, Barrick Gold Corp. (ABX.TO) surged 4.94 percent, and Yamana Gold Inc. (YRI.TO) added 3.35 percent.

Goldcorp (G.TO) added 1.53 percent and B2Gold (BTO.TO) gathered 1.61 percent.

The Capped Materials Index added 0.92 percent, due mainly to rising gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) down 1.15 percent and Agrium Inc. (AGU.TO) dropping 2.38 percent.

Franco-Nevada (FNV.TO) gained 0.96 percent, while Agnico Eagle Mines (AEM.TO) added 2.48 percent.

Silver Wheaton (SLW.TO) jumped 5.86 percent, after closing its bought-deal common share financing. A total of 38.93 million of its common shares were sold at a price of US$20.55 per share, for aggregate gross proceeds of about US$800 million.

Crude oil lower ended sharply higher on Wednesday, as the dollar tumbled against a basket of major currencies after the Fed Reserve in its statement gave indications of a rate hike, possibly in July or September, but not in April.

The Energy Index jumped 2.61 percent, with U.S. crude oil futures for April delivery, surging $1.20 or 2.8 percent to settle at $44.66 a barrel on the New York Mercantile Exchange Wednesday.

Among energy stocks, Canadian Oil Sands Limited (COS.TO) surged 7.65 percent, Suncor Energy Inc. (SU.TO) gathered 2.34 percent, Canadian Natural Resources Limited (CNQ.TO) added 0.32 percent, and Encana Corp. (ECA.TO) gained 3.09 percent.

Crescent Point Energy Corp. (CPG.TO) gained 5.01 percent, while Cenovus Energy Inc. (CVE.TO) gathered 2.19 percent.

Pacific Rubiales Energy (PRE.TO) ended flat at $2.65, after reporting a fourth quarter loss of $5.26 per share, compared to a profit of $0.43 per share last year. The company's Board also suspended its dividend.

The heavyweight Financial Index dropped 0.32 percent, with Bank of Nova Scotia (BNS.TO) down 0.39 percent, and Bank of Montreal (BMO.TO) dropping 0.20 percent.

National Bank of Canada (NA.TO) surrendered 0.11 percent, while Toronto-Dominion Bank (TD.TO) fell 0.22 percent. Canadian Imperial Bank of Commerce (CM.TO) added 0.34 percent, while Royal Bank of Canada (RY.TO) shed 0.28 percent.

The Diversified Metals & Mining Index added 0.68 percent, as First Quantum Minerals Ltd. (FM.TO) dropped 2.09 percent, Lundin Mining Corp. (LUN.TO) moved up 1.37 percent, and Teck Resources Limited (TCK-B.TO) gained 3.07 percent.

The Health Care Index gained 0.48 percent, as Valeant Pharmaceuticals International, Inc. (VRX.TO) dropped 0.22 percent, Catamaran Corp. (CCT.TO) dropped 0.08 percent, and Extendicare Inc. (EXE.TO) added 1.94 percent.

The Capped Industrials Index inched up 0.09 percent, with Bombardier Inc. (BBD.B.TO) down 1.21 percent and Air Canada (AC.TO) up 0.08 percent.

The Information Technology Index moved up 0.02 percent, with BlackBerry Limited (BB.TO) down 1.53 percent, Sierra Wireless, Inc. (SW.TO) down 0.16 percent, and Descartes Systems Group Inc. (DSG.TO) shedding 0.10 percent.

The Capped Telecommunication Index inched up 0.01 percent, with Rogers Communications Inc. (RCI.B.TO) up 0.46 percent, BCE Inc. (BCE.TO) down 0.67 percent and TELUS Corp. (T.TO) up 0.12 percent.

Information Services Corp. (ISV.TO) fell 1.94 percent, after reporting fourth quarter profit of $0.23 per share, down from $0.27 per share in the prior year.

WSP Global Inc. (WSP.TO) jumped 5.11 percent, after reporting a fourth quarter loss of $0.10 per share, compared to a profit of $0.34 per share last year.

In economic news, eurozone merchandise trade surplus for January rose sharply from the same month last year as exports stagnated and imports declined, data from Eurostat showed Wednesday. The unadjusted trade surplus grew to EUR 7.9 billion from EUR 0.1 billion a year ago. Exports remained unchanged during the period, while imports fell 6 percent.

Eurozone construction output increased for the second straight month in January, at a faster pace, data from Eurostat showed Wednesday. Output in the construction sector climbed 1.9 percent month-on-month in January, much faster than December's 0.2 percent increase, which was revised from a 0.8 percent decline. In November, production had fallen 0.4 percent.

The U.K. unemployment rate remained at the lowest level in more than six years and the employment rate hit the highest since 1971 during three months to January. The ILO jobless rate came in at 5.7 percent in three months to January, the same rate as in October to December period, the Office for National Statistics said Wednesday. It was expected to fall to 5.6 percent. Nonetheless, the rate was below the 6 percent seen in the quarter ending October and this was the lowest rate in more than six years.

Meanwhile, UK Chancellor of the Exchequer George Osborne raised the economic growth forecasts for this year and next, but warned that any adverse development in Greece could significantly affect the economy. The growth forecast for this year was raised to 2.5 percent from the 2.4 percent projected by the Office for Budget Responsibility in its December autumn statement. The projection for next year is forecast at 2.3 percent from 2.2 percent previously. Growth is seen improving to 2.4 percent by 2019.

UK's unemployment rate was forecast to fall to 5.3 percent this year, while inflation forecast was revised down to 0.2 percent.

The Organization for Economic Cooperation and Development said growth prospects in the major economies look slightly better than its previous assessment in November and called for a balanced policy to ensure sustainable growth.

The think tank projected the U.S. economic growth at 3.1 percent this year and 3 percent in 2016. The forecast for both 2015 and 2016 were left unrevised. Japan is projected to grow by 1 percent in 2015, faster than the prior estimate of 0.8 percent. In 2016, it is expected to expand 1.4 percent compared to the 1 percent projected in November.

The 19-nation bloc eurozone is estimated to expand 1.4 percent in 2015 and by 2 percent in 2016.

China, the second largest economy in the world, is expected to grow by about 7 percent in 2015. The estimate for 2015 was revised down from 7.1 percent, while that for 2016 was left unchanged at 6.9 percent.

India will grow by 7.7 percent in 2015 and by 8 percent in 2016, the OECD said. The figures were revised up from 6.4 percent and 6.6 percent, respectively.