Fed optimism, Tim Hortons lift TSX to 1-week high

Tue Jun 18, 2013 4:57pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index climbed to a one-week high on Tuesday as positive economic data and hopes that the U.S. Federal Reserve will stick to its supportive monetary policy drove gains in almost every major sector.

Coffee chain Tim Hortons Inc THI.TO also boosted Canada's main stock index rising 4 percent on news that it now faces pressure from U.S. hedge fund Scout Capital Management to make changes after recently outlining plans to address the concerns of activist investor Highfields Capital.

Sentiment improved further after U.S. consumer prices rose in May and a gauge of underlying price pressures indicated signs of stabilizing after a long decline.

However, speculation continued on whether the Fed will shed light at the end of its two-day meeting on Wednesday on when it might begin scaling back its bond buying program.

While global markets were roiled in recent weeks by talk of a possible stimulus rollback, investors have over the past two days been betting that the Fed will not turn off the monetary tap anytime soon.

"It's like a doctor saying to the patient, ‘you don't need as much medicine anymore' and the patient saying, ‘No, no, I want more medicine'," said Stan Wong, vice president and portfolio manager at Macquarie Private Wealth.

"Based on current data, I don't see the Fed stepping in and reducing stimulus in a major way until at least the first quarter of next year."

"The Fed is always late to the game," he added. "They're late coming in and adding stimulus and they are late leaving as well."   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch