Fed-fueled rally lifts TSX to one-month high
By John Tilak
TORONTO (Reuters) - Canada's main stock index recorded one of its biggest jumps of the year on Thursday, hitting a one-month high after Federal Reserve Chairman Ben Bernanke calmed market fears when he reiterated support for the U.S. central bank's stimulus program.
The rally sparked gains across every major sector and helped the Toronto market, up for a fourth straight session, turn positive on the year.
Gold producers showed the sharpest gain, climbing 6.6 percent. Barrick Gold Corp (ABX.TO: Quote) was up 7.9 percent and Goldcorp Inc G.TO rose 7.3 percent, with the two having a major influence on the index's rise.
Bernanke said on Wednesday the Fed must keep a stimulative monetary policy in place due to weak to inflation levels and a high unemployment rate.
"Bernanke went out of his way to assuage the market's concerns," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. "Sure, the Fed is going to taper at some point, but just not yet."
"This is a relief rally," he added. "Does it have the potential to ride up even higher in the short term? I think it does."
Markets are overreacting today, said Peter Westaway, chief economist at Vanguard Asset Management Ltd, a unit of Vanguard Group Inc, which manages over $2.4 trillion in assets.
"The market has perhaps got a little bit overexcited about what the Fed said," Westaway said. "I'm slightly surprised quite how much the market has taken it as a signal that policy is going to be looser for much longer." Continued...