TORONTO (Reuters) - Canada’s main stock index edged higher on Tuesday, driven by gains in most major sectors as investors nervously awaited the outcome of a key U.S. Federal Reserve policy meeting.
The market expects the Fed to provide more clarity on interest rates at the end of a two-day policy meeting on Wednesday, with some speculating that the central bank might raise rates earlier than had been thought.
“It looks there is some optimism about the Fed meeting,” said Youssef Zohny, portfolio manager at Stenner Investment Partners of Richardson GMP Ltd, which manages about C$28.3 billion in assets.
“Investors will be paying attention to the (Fed‘s) language, and as we’ve seen in the past few years, their language has been very dovish,” he added. “Investors want to see more of the same for the rally to continue.”
Zohny said that continued economic stimulation by world central banks could provide a lift for commodities in the medium term. “We could see some relative outperformance of the resource areas which have underperformed, and that should help the TSX.”
The benchmark TSX index recovered on Tuesday after declining in the previous two sessions. It is up about 14 percent this year.
The market also digested comments by Bank of Canada Governor Stephen Poloz, who said recent Canadian economic data has been encouraging, particularly on exports, but that there is still a substantial amount of slack in the job market.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 27.98 points, or 0.18 percent, at 15,510.54. Eight of the 10 main sectors on the index were higher.
Shares of energy producers added 0.4 percent after the price of oil bounced higher. Suncor Energy Inc SU.TO gained 0.9 percent to C$43.47, and Canadian Natural Resources Ltd CNQ.TO advanced 0.7 percent to C$45.74.
The materials sector, which includes mining stocks, strengthened as commodity prices rose. Diversified miner Teck Resources Ltd TCKb.TO climbed 1.5 percent to C$23.68, and fertilizer producer Potash Corp POT.TO was up 1.2 percent at C$38.65.
In corporate news, the outgoing chief executive of Toronto-Dominion Bank TD.TO, Ed Clark, said the Canadian government should tighten lending rules further to discourage consumers from taking on too much debt in an environment of low interest rates.
TD’s stock was down 0.2 percent at C$57.47.
Editing by Peter Galloway