TSX hits five-month high, boosted by Fed measures
By Alastair Sharp
TORONTO (Reuters) - Canada's main stock index gained more than 1 percent on Friday in a broad, resource-led rally backed by higher commodity prices a day after the U.S. Federal Reserve announced major stimulus measures.
The TSX extended Thursday's 1 percent rally, with traders inspired by the Fed's promise to pump $40 billion into the U.S. economy every month, as long as inflation remains contained, until the country's weak labor market turns around.
Resource stocks were buoyed as investors returned to riskier assets. Stronger commodity prices translated to a 2 percent gain in energy stocks and a 2.6 percent rise in materials shares.
"I'd like to hope this lasts for a while and provides some measure of optimism for investors going forward, but it's going to take a while for it to work through the system," said Rick Hutcheon, president and chief operating officer at RKH Investments, referring to both the Fed news and a similar move from the European Central Bank earlier this month.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE climbed 139.31 points, or 1.13 percent, to close at 12,499.47 on Friday. Seven of the 10 main sectors were higher.
Earlier in the session, the index rose as high as 12,529.77, the highest point since March 27, when it touched 12,603.71.
The index notched a 1.9 percent gain for the week and has moved more than 4 percent higher since early September, when first the ECB and then the Fed lined up to announce big bond-buying plans to support stumbling economies.
"Whether or not that is enough in the short term to maintain the enthusiasm or euphoria, personally I doubt it, but the general direction has been established here," Hutcheon said. Continued...