TSX jumps to one-week high as Fed cuts bond buying

Wed Dec 18, 2013 4:34pm EST
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By John Tilak

TORONTO (Reuters) - Canada's main stock index climbed to a one-week high on Wednesday after the U.S. Federal Reserve said it will begin scaling back its asset purchase program.

The market has been fixated in recent months on when the Fed will start rolling back its stimulative bond purchases, which have injected trillions of dollars into the U.S. economy since the program's inception.

With the world's biggest economy showing greater signs of acceleration, investor expectations that the U.S. central bank might soon start to take its foot off the gas pedal had been gathering momentum.

Despite fears of a massive selloff in the face of a cutback, the Toronto market quickly moved higher after some choppiness immediately after the Fed made its announcement.

"It was very warm reception," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. "It's one thing that's out of the way."

"All the indicators show that the U.S. economy is poised to grow at a faster rate next year," he added.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 154.57 points, or 1.17 percent, at 13,334.73 after rising as high as 13,358.10, its highest since December 10.

The Fed also suggested its key interest rate would stay low for even longer than previously promised.   Continued...

An electronic board displays the midday TSX index in Toronto February 16, 2011. REUTERS/Mark Blinch