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TSX jumps 471 points, global markets soar on central banks, China decisions
By Kim Covert, Postmedia News November 30, 2011 2:27 PM
Canada's benchmark stock index made its biggest gains Wednesday in a three-day streak that has seen it rise more than six per cent, wiping out the losses of the previous eight sessions.
The S&P/TSX finished the day at 12,204.11, a gain of 471.61 points, or 4.02 per cent, with all 10 of its sub-indexes advancing. It was part of a near-global rally following the announcement by several of the world's central banks, including the Bank of Canada, that they would reduce the cost of emergency borrowing of U.S. dollars. The People's Bank of China also announced that it would cut reserve requirements for banks.
"This is a solid positive that was designed to address interbank funding pressures that were rapidly climbing for European banks," Scotia Capital economists Derek Holt and Karen Cordes Woods wrote in an afternoon note, but added, "This is no game changer in other respects, however, as it does nothing to directly address Europe's sovereign debt crisis or U.S. political and fiscal policy risks into year end and next year."
That cautionary tone was echoed by CIBC World Markets economists Emanuella Enenajor and Avery Shenfeld, who called the move "largely symbolic."
"The benefits of the move will mostly trickle to a small sample of banks in the eurozone as that region accounts for the lion's share of tapping of (U.S. Federal Reserve) lines. Thus, the 'co-ordinated' multi-nation nature of (Wednesday's) move is largely symbolic."
Apart from those liquidity measures, there was a host of positive economic data to cheer investors on Wednesday. In Canada, third-quarter GDP came in at an annualized rate of 3.5 per cent, well above expectations. In the U.S., a private-sector report showed companies added more jobs last month than expected and pending home sales also rose.
The Dow Jones surged 490.05 points, or 4.24 per cent, to 12,045.68, and the Nasdaq composite index ended the day at 2,620.34, up 104.83 points, or 4.17 per cent.
"Building on the positive Black Friday sales, house prices and consumer confidence numbers from earlier in the week it now not only appears that the U.S. economy turned the corner in late September but that its rebound may have accelerated in November," said analyst Colin Cieszynski of CMC Markets. "Better than expected Q3 GDP for Canada . . . also suggested that the global economy has been more resilient in the face of all this uncertainty than many were willing to give it credit for."
Canada's junior Venture exchange rose 43.43 points, or 2.89 per cent, to 1,548.45.
The Canadian dollar pared some of its earlier gains but ended the day ahead by 95 basis points, at 98.01 cents US.
The price of crude oil rose 57 cents US to $100.36 US a gallon, while gold gained $31.40 US to $1,750.30 US an ounce.
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By Kim Covert, Postmedia News November 30, 2011 2:27 PM
Canada's benchmark stock index made its biggest gains Wednesday in a three-day streak that has seen it rise more than six per cent, wiping out the losses of the previous eight sessions.
The S&P/TSX finished the day at 12,204.11, a gain of 471.61 points, or 4.02 per cent, with all 10 of its sub-indexes advancing. It was part of a near-global rally following the announcement by several of the world's central banks, including the Bank of Canada, that they would reduce the cost of emergency borrowing of U.S. dollars. The People's Bank of China also announced that it would cut reserve requirements for banks.
"This is a solid positive that was designed to address interbank funding pressures that were rapidly climbing for European banks," Scotia Capital economists Derek Holt and Karen Cordes Woods wrote in an afternoon note, but added, "This is no game changer in other respects, however, as it does nothing to directly address Europe's sovereign debt crisis or U.S. political and fiscal policy risks into year end and next year."
That cautionary tone was echoed by CIBC World Markets economists Emanuella Enenajor and Avery Shenfeld, who called the move "largely symbolic."
"The benefits of the move will mostly trickle to a small sample of banks in the eurozone as that region accounts for the lion's share of tapping of (U.S. Federal Reserve) lines. Thus, the 'co-ordinated' multi-nation nature of (Wednesday's) move is largely symbolic."
Apart from those liquidity measures, there was a host of positive economic data to cheer investors on Wednesday. In Canada, third-quarter GDP came in at an annualized rate of 3.5 per cent, well above expectations. In the U.S., a private-sector report showed companies added more jobs last month than expected and pending home sales also rose.
The Dow Jones surged 490.05 points, or 4.24 per cent, to 12,045.68, and the Nasdaq composite index ended the day at 2,620.34, up 104.83 points, or 4.17 per cent.
"Building on the positive Black Friday sales, house prices and consumer confidence numbers from earlier in the week it now not only appears that the U.S. economy turned the corner in late September but that its rebound may have accelerated in November," said analyst Colin Cieszynski of CMC Markets. "Better than expected Q3 GDP for Canada . . . also suggested that the global economy has been more resilient in the face of all this uncertainty than many were willing to give it credit for."
Canada's junior Venture exchange rose 43.43 points, or 2.89 per cent, to 1,548.45.
The Canadian dollar pared some of its earlier gains but ended the day ahead by 95 basis points, at 98.01 cents US.
The price of crude oil rose 57 cents US to $100.36 US a gallon, while gold gained $31.40 US to $1,750.30 US an ounce.
[You must be registered and logged in to see this link.]
