Canadian Stocks Are Climbing Ahead Of Fed Announcement -- Canadian Commentary


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( - The Canadian stock market has been rising since the open Wednesday and is enjoying a triple digit gain. Early strength in commodity prices has given the market a significant leg up. An unexpected announcement from the Bank of Japan is providing early strength to gold stocks, while energy stocks are rising ahead of today's U.S. crude inventory report.

The Bank of Japan modified its existing policy framework, giving thrust to the yield curve as it still struggles to achieve the 2 percent inflation target.

"With a view to achieving the price stability target of 2 percent at the earliest possible time, the Bank decided to introduce 'QQE with yield curve control'," the bank said in a statement on Wednesday. The BOJ board voted 7-2 on the latest policy decision.

Markets in Europe got off to a strong start Wednesday, following the announcement from the Bank of Japan. However, the European markets have pared their gains ahead of the Federal Reserve announcement, which will take place after the European close.

Markets in the United States are up slightly in early trade Wednesday. The Bank of Japan's decision to modify its existing policy framework created some early buying interest. However, trading activity remains subdued ahead to the Federal Reserve's monetary policy announcement this afternoon. The Fed is widely expected to leave interest rates unchanged, but traders are likely to keep a close eye on the accompanying statement.

The benchmark S&P/TSX Composite Index is up 118.53 points or 0.82 percent at 14,640.51.

On Tuesday, the index closed up 25.75 points or 0.18 percent, at 14,521.98. The index scaled an intraday high of 14,573.25 and a low of 14,514.47.

The Gold Index is higher by 3.16 percent. Gold prices are rising Wednesday after the Bank of Japan offered a surprising policy statement, and ahead of the crucial interest rate announcement from the Federal Reserve.

Barrick Gold (ABX.TO) is climbing 3.13 percent and Kinross Gold (K.TO) is gaining 3.99 percent. Eldorado Gold (ELD.TO) is rising 2.28 percent and IAMGOLD (IMG.TO) is advancing 3.63 percent. B2Gold (BTO.TO) is up 3.97 percent and Yamana Gold (YRI.TO) is increasing 3.22 percent. Goldcorp (G.TO) is higher by 3.95 percent.

The Capped Materials Index is also up 2.40 percent. Agnico Eagle Mines (AEM.TO) is gaining 3.17 percent and Franco-Nevada (FNV.TO) is rising 1.74 percent. Silver Wheaton (SLW.TO) is climbing 3.34 percent and Agrium (AGU.TO) is advancing 0.81 percent. Potash Corp. of Saskatchewan (POT.TO) is adding 0.52 percent.

The Capped Industrials Index is gaining 1.03 percent. Canadian National Railway is higher by 1.20 percent and Canadian Pacific Railway (CP.TO) is up 1.26 percent. Bombardier (BBD-B.TO) is climbing 1.20 percent and Finning International (FTT.TO) is rising 1.74 percent. AutoCanada (ACQ.TO) is also increasing 1.65 percent.

The Energy Index is up 1.02 percent. Crude oil prices are approaching $45 a barrel this morning. The American Petroleum Institute said US crude oil inventories dropped 7.5 million barrels.

The U.S. EIA reported this morning that U.S. crude inventories unexpectedly dropped 6.2 million barrels last week.

Cenovus Energy (CVE.TO) is gaining 0.86 percent and Husky Energy (HSE.TO) is rising 1.04 percent. Encana (ECA.TO) is advancing 1.91 percent and Crescent Point Energy (CPG.TO) is climbing 1.82 percent. Canadian Natural Resources (CNQ.TO) is up 0.85 percent and Enbridge (ENB.TO) is adding 0.40 percent.

Suncor Energy (SU.TO) is increasing 0.54 percent. The company said that it has been advised by the operator of the Shelburne Basin joint venture exploration project, Shell Canada Limited, that the drilling of the first exploration well has been completed and it is non-commercial.

The Capped Healthcare Index is higher by 0.87 percent. Valeant Pharmaceuticals Internationals (VRX.TO) is rising 2.38 percent and Extendicare (EXE.TO) is adding 0.89 percent.

The Capped Information Technology Index is rising 0.82 percent. Constellation Software (CSU.TO) is up 0.54 percent and Sierra Wireless (SW.TO) is advancing 1.97 percent. Descartes Systems Group (DSG.TO) is gaining 0.69 percent and BlackBerry (BB.TO) is climbing 1.10 percent. Avigilon (AVO.TO) is also increasing 1.40 percent.

The heavyweight Financial Index is increasing 0.40 percent. Royal Bank of Canada (RY.TO) is up 0.49 percent and Bank of Nova Scotia (BNS.TO) is rising 0.13 percent. Bank of Montreal (BMO.TO) is higher by 0.48 percent and Toronto Dominion Bank (TD.TO) is adding 0.33 percent.

Canadian Imperial Bank of Commerce (CM.TO) is gaining 0.51 percent. The company has formed a technology partnership with Australia NAB and Israel's Bank Leuimi.

The Capped Telecommunication Services Index is up 0.01 percent. TELUS (T.TO) is gaining 0.40 percent and BCE (BCE.TO) is rising 0.08 percent.

TMX Group (X.TO) announced that it is cutting 115 jobs. Shares are declining 1.43 percent.

On the economic front, Statistics Canada reported this morning that Canadian wholesale sales rose 0.3 percent in July. The result was in line with economists' expectations.

The U.K. budget deficit narrowed in August, but the bigger-than-expected shortfall highlights the difficulty in achieving the targets set ahead of the Brexit vote. Public sector net borrowing excluding interventions decreased by GBP 0.9 billion from prior year to GBP 10.5 billion in August, the Office for National Statistics reported Wednesday.

Nonetheless, the deficit was above the expected level of GBP 10.2 billion. The deficit for July was revised to GBP 1.9 billion from GBP 977 million.

In commodities, crude oil futures for October delivery are up 0.87 or 1.98 percent at $44.92 a barrel.

Natural gas for October is down 0.012 or 0.39 percent at $3.035 per million btu.

Gold futures for December are up $12.00 or 0.91 percent at $1,330.20 an ounce.

Silver for December is up $0.458 or 2.38 percent at $19.735 an ounce.

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Referenced Symbols: 8301 , ABX , AEM , AGU , BMO

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