Toronto stock market closed at record high of 15,109.25 on Wednesday
TORONTO - The Toronto stock market closed at a record high Wednesday as traders received reassurances from the U.S. Federal Reserve that it likely won't move on interest rates until 2015.
The S&P/TSX composite index added 53.36 points to 15,109.25, pushed up by gold and material stocks to surpass its previous record close set six years ago to the day in June 2008, just before the Great Recession.
The Canadian dollar rose 0.12 of a cent to 92.17 cents US.
In its latest policy announcement, the U.S. central bank said it will stay on track and will with reduce its monthly bond buyback program by a further $10 billion to US$35 billion a month as it continues to see more signs of a strengthening economy. The stimulus has kept long-term loan rates low and propped up stock markets.
The Fed did not say when it might start raising its short-term benchmark rate, only that it plans on keeping rates low "for a considerable time" after it ends all the bond purchases.
Most economists think a rate increase is still at least a year away despite recent signs of rising inflation, which chair Janet Yellen dismissed as "noisy" in comments following the policy announcement.
Macan Nia, manager of the portfolio advisory group at Manulife Asset Management, said he doesn't expect the Fed decision to have much of an impact on markets.
"Given the evaluation of the U.S. market, which we believe is fairly valued, it won't be a catalyst for dramatic movement," said Nia. "The market is earnings driven and based on more about the underlying economy rather than the continuation of easing monetary policy. I don't think the market expects anything different."
On Wall Street, the Dow Jones industrials gained 98.13 points to 16,906.62, the Nasdaq rose 25.61 points to 4,362.84, and the S&P 500 index added 14.99 points to 1,956.98.
In corporate news, the federal government gave conditional approval Tuesday for Enbridge Inc.'s (TSX:ENB) proposed $7-billion, 1,200-kilometre Northern Gateway pipeline that would connect Alberta oilsands to the British Columbia coast and open Canadian oil markets to customers across in Asia. However, pipeline opponents, including B.C. aboriginal groups, are vowing that it will never be built and plan legal challenges as well as protests. Shares in Enbridge fell 58 cents to $51.38.
Nia said there wasn't a lot of reaction from energy and currency traders because the approval came with so many caveats.
"It was the market expectation that the federal government would approve," he said. "But that's just the first checkmark of a long list of checkmarks that Enbridge needs to check before it can even start construction on the pipeline and before any energy reaches from Calgary to the western port."
In Iraq, Islamic militants attacked the country's largest oil refinery after capturing a large swath of northern territory in the past week, including the major city of Mosul.
The TSX energy sector was up 0.20 per cent despite the decline in Enbridge shares as well as a 39-cent drop in the July crude contract to US$105.97 a barrel.
Gold was the leading advancer on the TSX with a 2.5 per cent gain as August bullion rose 70 cents to US$1,272.70 an ounce. July copper was unchanged at US$3.06 a pound.
Follow @LindaNguyenTO on Twitter.
Note to readers: This is a corrected story. A version that moved June 18 gave the wrong closing value of the Canadian dollar.
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