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.
That supported sections of the market, such as insurance companies, that are considered interest-rate sensitive. Manulife Financial Corp (MFC.TO) jumped 2.5 percent to C$20.23.
“I think they’re going in the right direction,” said Adrian Mastracci, portfolio manager at KCM Wealth Management. “I would agree with the Fed that rates aren’t going to go very far in the near future.”
“It’s volatile, and that’s one thing investors have to be in tune with,” he added. “It’s going to be volatile from here.”
All of the 10 main sectors on the index rose on Wednesday.
In corporate news, Barrick Gold Corp (ABX.TO) said on Tuesday that two long-time directors, Donald Carty and Robert Franklin, have resigned from the company’s board. The stock was down 0.8 percent to C$18.08.
Shares of BlackBerry Ltd (BB.TO) slipped 0.2 percent to C$6.47 after the smartphone maker said on Tuesday that former SAP executive John Sims will join the company as head of its global enterprise services business.
Editing by Peter Galloway and James Dalgleish