Canada's benchmark stock index made its biggest gains Wednesday in a three-day streak that has seen it rise more than 6%, wiping out losses of the last eight sessions.
The S&P/TSX finished the day at 12,204.11, a gain of 471.61 points, or 4.02%, 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 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' multination nature of [Wednesday's] move is largely symbolic."
Apart from those liquidity measures, there was a host of positive economic data to cheer investors Wednesday. In Canada, third-quarter GDP came in at an annualized rate of 3.5%, 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%, to 12,045.68, and the Nasdaq composite index ended the day at 2,620.34, up 104.83 points, or 4.17%.
"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 ...than many were willing to give it credit for."
Canada's junior Venture exchange rose 43.43 points, or 2.89%, to 1,548.45.
The Canadian dollar pared some of its earlier gains but ended the day ahead by US0.95¢, at US98.01¢.
The price of crude oil rose US57¢ to US$100.36 a barrel, while gold gained US$32.10 to US$1,745.50 an ounce.
