Banks drive small TSX gain as Fed meets
By John Tilak
TORONTO (Reuters) - Canada's main stock index closed with a small gain on Tuesday with financial shares rising as the market braced for the outcome of a two-day U.S. Federal Reserve policy meeting that was expected to result in a slow tightening of U.S. monetary policy.
A jump in Valeant Pharmaceuticals International (VRX.TO: Quote) after Goldman Sachs resumed coverage of the stock with a "conviction buy" rating also helped support the market.
But gains were limited by a decline in fertilizer producer Potash Corp (POT.TO: Quote) a day after competitor Mosaic Co (MOS.N: Quote) cut its third-quarter sales and price outlooks for fertilizer ingredients potash and phosphate.
All eyes were on the Fed, whose Open Market Committee meeting Tuesday and Wednesday was set to decide the fate of the central bank's bond buying program. When the Fed announces the results of the meeting on Wednesday, the market hopes for clarity on when it will begin scaling back its stimulus program and by how much.
"The market seems to be relatively sanguine about things," said Gavin Graham, chief strategy officer at Integris Pension Management Corp, adding that investors have already priced in a moderate trimming of stimulus.
"The market is saying, ‘we've had this selloff in anticipation. When we actually hear tomorrow what the pace of tapering is, maybe it won't be as bad as we expected'," he added.
Still, some investors warned that Canadian equities will vulnerable because of the market's high exposure to natural resource prices.
"I'm seeing some downside potential," said Marcus Xu, portfolio manager at MY Capital Management Corp in Vancouver. Continued...