S&P/TSX Composite Index Rises, US Markets Soar on Fed Optimism


Canada’s main stock index rose nearly 1% on Wednesday after falling in the morning, with gains in metals, industrials and other sectors offsetting declines in energy shares, while The US market grew stronger.

Comments by the head of the Federal Reserve stoked optimism in US markets, said Greg Taylor, chief investment officer of Intent Investment, with tech stocks surging and dragging Nasdaq up more than 4 %.

Fed Chairman Jerome Powell said on Wednesday that the central bank may soon begin to slow the pace of rate hikes, reaffirming expectations that the end of the cycle is near.

This last factual update from the Fed ahead of the final rate announcement of the year in the US is probably “a little bit more dovish than some feared”, Taylor said.

“He is definitely signaling that the December meeting will be a 50 basis point rate hike, while talking more about slowing the pace of rate hikes,” Taylor said.

“And that’s exactly what the market wants to hear.”

The S&P/TSX composite index rose 175.85 points to 20,453.26.

In New York, the Dow Jones Industrial Average rose 737.24 points, or 2.18%, to 34,589.77. The S&P 500 index rose 122.48 points, or 3.09%, to 4,080.11, while the Nasdaq index added 484.22 points, or 4.41%, to 11,486.00.

With less exposure to technology in Canada and some disappointing bank earnings, the TSX hasn’t been as volatile as US indexes have been, Taylor said.

Two banks reported earnings on Wednesday: Royal Bank of Canada posted profits that were more or less unchanged from last year, while National Bank of Canada posted a 4% drop in profits.

“Banks are an important part of the stock market, and with low earnings, that could hurt TSX performance,” Taylor said.

Taylor said the Canadian dollar rose against the weakening of the US dollar.

The Canadian dollar traded for 74.03 US cents versus 73.65 US cents on Tuesday.

The January crude oil contract rose $2.35 to $80.55 a barrel and the January natural gas contract fell 31 cents to $6.93 a mmBTU.

Although oil prices also rose, the energy index on TSX fell. Overall, however, copper and base metals rose, with optimism continuing about future demand from China, Taylor said.

“There are still some rumors that China is ready to reopen. And whenever you hear comments like that, commodities start to appreciate well,” he said.

“That has certainly helped oil prices over the past few days.”

Gold for February delivery fell $3.80 to $1,759.90 an ounce and March contract was up 10 cents to $3.73 a pound.

This report by The Canadian Press was first published on November 30, 2022.

Companies in this story: (TSX:GSPTSE, TSX:CADUSDX)


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