CN: TSX surges as weak greenback supports commodities, loonie closer to parity
By Malcolm Morrison, The Canadian Press
TORONTO - The Toronto stock market registered sharp gains Thursday as the latest dose of stimulus from the U.S. Federal Reserve weighed on the greenback and sent commodity prices higher — and raised hopes that this latest round of assistance can boost a faltering recovery.
The S&P/TSX composite index surged 185.4 points to 12,856.5, weighed down slightly by shares in Potash Corp. of Saskatchewan (TSX:POT) after the federal government on Wednesday rejected BHP Billiton’s US$39-billion bid for the fertilizer company. BHP had to demonstrate the deal represented a likely net benefit to Canada.
Industry Minister Tony Clement gave BHP another month to change its bid before a final ruling on the transaction. PotashCorp shares were down $5.10 or about 3.5 per cent to $141.11.
U.S. dollar weakness pushed the Canadian dollar close to parity, up 0.42 of a cent to 99.74 cents US.
The TSX Venture Exchange moved up 26 points to 1,974.64.
Investors also took in earnings news from a variety of Canadian corporate heavyweights.
The Fed announced Wednesday that it will buy US$600 billion in government bonds over the coming eight months in a fresh attempt to energize a faltering U.S. economy.
The measure is known as quantitative easing, which is aimed at creating more dollars and increasing the supply of money in the economy. The latest round of QE involves the Fed buying US$75 billion in Treasury bonds per month until June next year.
The Fed hopes that the policy will help drive down interest rates for households and businesses, giving the wider economy its source of stimulus.
The U.S. dollar has deteriorated sharply since the Fed first raised the possibility of more stimulus in late August, which has raised commodity prices. Since commodities like oil and gold are priced in U.S. dollars, a weaker greenback makes them more attractive to buyers who use foreign currencies.
The energy sector led advancers, up 2.12 per cent as the December crude contract on the New York Mercantile Exchange was ahead $1.76 to US$86.45 a barrel.
Suncor Energy Inc. (TSX:SU) earned just over $1 billion in the third quarter as the oil giant booked asset disposal gains and oilsands operations in northern Alberta generated one of the best performances in the company’s history. Canada’s largest oil and gas company said Thursday it earned 65 cents per common share in the quarter, well above analyst estimates and its shares advanced $1.35 to $34.25.
