Fed surprise propels TSX to two-year high
By John Tilak
TORONTO (Reuters) - Canada's main stock index climbed to its highest point in more than two years on Wednesday, led up by a jump in gold producers after the U.S. Federal Reserve said it would keep its monetary stimulus measures in place for now.
The Fed's surprise announcement unleashed a flood of buying in the Toronto market as investors took positions in heavy-volume trading. The market in general had expected the Fed to scale back its stimulus program.
High-yield sectors such as REITs, utilities and telecoms clocked solid gains as they tend to thrive in a low interest-rate environment. But insurers slipped.
Shares of gold miners surged 8.7 percent, posting their biggest jump in about four years. The price of gold soared 4.2 percent.
The Fed said it would continue buying bonds at an $85 billion monthly pace, citing strains in the economy from tight fiscal policy and higher mortgage rates.
"People are extremely surprised. All life-support systems remain for the time being," said Matt Skipp, president of SW8 Asset Management, a Toronto-based hedge fund.
"Obviously the markets are taking a big leg up as a result," he added. "But there might be moments of introspection when you realize they don't have enough confidence in the economy to begin to taper."
Skipp said he doubled his exposure to gold-mining stocks to 10 percent of his portfolio after the Fed statement. Continued...