TORONTO – Oil and gas stocks helped boost the Toronto stock index Wednesday as Wall Street finished relatively flat after the U.S. Federal Reserve’s latest economic and interest rate policy update.
The S&P/TSX composite index climbed 96.63 points to 15,389.60, with a surging energy sector, up 2.5 per cent, leading gainers.
Manulife Investment strategist Kevin Headland attributed the commodity-heavy index’s sharp rise to rallying oil prices, as the November crude contract advanced 79 cents to US$50.69 per barrel.
“I think it’s moving on that,” he said, adding that investors might be seeing an opportunity with energy stocks to purchase some underpriced or mispriced securities in Canada.
“With energy, there’s been a lot of negativity.”
In New York, major indices were mixed with minor movements as investors sized up two highly-anticipated announcements by the Federal Reserve.
The U.S. central bank said Wednesday it will begin to unwind its $4.5 trillion balance sheet next month, gradually unloading the massive portfolio of bonds it amassed after the 2008 financial crisis to try to sustain a frail economy.
The Fed also decided to leave its short-term benchmark interest rate between 1 per cent and 1.25 per cent, but still expects to increase the rate one more time this year and three times in 2018. The Fed has modestly raised the rate four times since December 2015 after keeping it at a record low for seven years.
The Dow Jones industrial average advanced 41.79 points to 22,412.59 and the S&P 500 index inched up 1.59 points to 2,508.24. The Nasdaq composite index edged down 5.28 points to 6,456.04.
“I think it was fully expected, at least on our part, that the Fed was going to of course start to unwind its balance sheet and was going to maintain its expectation for another rate hike this year,” said Headland.
“It’s our belief that the market was really underpricing another rate hike this year on the part of the Fed.”
In currency markets, the Canadian dollar was trading at an average price of 81.48 cents US, up 0.03 of a cent.
Elsewhere in commodities, the December gold contract gained $5.80 at US$1,316.40 an ounce, the October natural gas contract was down three cents at US$3.09 per mmBTU, and the December copper contract was unchanged at US$2.97 a pound.
– With files from The Associated Press.
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