TSX Ends Higher As Fed Maintains Rates -- Canadian Commentary

(RTTNews) - Canadian stocks ended higher on Thursday, after the U.S. Federal Reserve decided to maintain interest rates at near zero, citing global economic headwinds that could impact economic activity. The main index surrendered much of the gains but still ended slightly higher, driven by the uptick in energy and gold stocks.

With concerns over global economic headwinds, volatility in stock markets and anemic inflation, the Federal Reserve on Thursday decided against raising interest rates. The Fed left its interest rate in the the target range unchanged at zero to 0.25 percent.

Most Fed officials maintained that a rate hike would be appropriate this year given the recent pace of economic activity, but could not trigger it at this two-day meeting.

In 2008, the Fed slashed its benchmark lending rate to a record low near zero, where it has remained since.

"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the FOMC statement read.

Updating their projections, policy makers now think the economy can grow at 1.8 percent to 2.2 percent over the long term, down from 2 percent to 2.3 percent in the June forecast.

Markets in Europe ended largely in positive territory, ahead of the Fed announcement on its monetary policy. On a light day for economic data, U.K. retail sales grew for the first time in three months in August. The Swiss National Bank left its key interest rates unchanged in the negative zone as widely expected by economists.

Markets in the United States witnessed a mixed close with substantial volatility following the Federal Reserve's monetary policy announcement. The major averages ended the session with the Nasdaq up 0.1 percent, while the the Dow slipped 0.4 percent. The S&P 500 ended the session, down 0.3 percent.

A Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have dropped unexpectedly in the week ended September 12, with jobless claims falling to a nearly two-month low.

A report from the Commerce Department showed new residential construction in the U.S. to have decreased in August, although building permits showed a notable increase.

The Federal Reserve Bank of Philadelphia on Thursday said manufacturing conditions in the mid-Atlantic region were mixed in September, although the headline index of regional manufacturing activity unexpectedly indicated a contraction.

The benchmark S&P/TSX Composite Index closed Thursday at 13,787.16, up 23.38 points or 0.18 percent. The index scaled an intraday high of 13,876.00 and a low of 13,704.58.

On Wednesday, the index closed up 301.07 points or 2.24 percent, at 13,763.78. The index scaled an intraday high of 13,776.69 and a low of 13,501.27.

The Diversified Metals & Mining Index gained 0.65 percent as First Quantum Minerals (FM.TO) added 0.80 percent, while Teck Resources Limited (TCK-B.TO) shed 0.68 percent.

Lundin Mining Corporation (LUN.TO) gained 2.83 percent, Sherritt International Corp. (S.TO) gathered 2.04 percent, and HudBay Minerals Inc. (HBM.TO) moved up 2.69 percent.

The heavyweight Financial Index slipped 0.82 percent, as Royal Bank of Canada (RY.TO) dropped 0.70 percent while National Bank of Canada (NA.TO) shed 0.23 percent.

Toronto-Dominion Bank (TD.TO) fell 0.94 percent, Bank of Nova Scotia (BNS.TO) shed 0.49 percent, and Bank of Montreal (BMO.TO) dropped 0.49 percent.

Crude oil ended lower after the Federal Reserve decided against an interest rate hike on concerns over the global economic headwinds that could impact economic activity.

Crude oil prices surged over 5 percent yesterday, after a report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have declined more than expected last week.

The Energy Index gained 1.26 percent, with U.S. crude oil futures for October delivery, the most actively traded contract, slipping $0.25 or 0.5 percent, to settle at $46.90 a barrel on the New York Mercantile Exchange Thursday.

Among energy stocks, Crescent Point Energy Corp. (CPG.TO) fell 0.46 percent, Canadian Natural Resources Limited (CNQ.TO) gained 0.11 percent, Encana Corp. (ECA.TO) added 0.50 percent and Cenovus Energy (CVE.TO) jumped 5.31 percent.

Canadian Oil Sands (COS.TO) dropped 0.73 percent, Suncor Energy Inc. (SU.TO) gathered 0.92 percent, and Baytex Energy Corp. dived 4.06 percent.

Gold futures ended lower as investors remained focused on the outcome of the Federal Reserve's monetary policy meet, largely on a hike in interest rates.

The Gold Index gained 2.44 percent, although gold for December delivery dropped $2.00 or 0.2 percent, to settle at $1,117.00 an ounce on the New York Mercantile Exchange Thursday.

Among gold stocks, Yamana Gold Inc. (YRI.TO) jumped 5.63 percent, Barrick Gold (ABX.TO) gathered 1.81 percent, Eldorado Gold (ELD.TO) gained 5.00 percent, and Kinross Gold Corp. (K.TO) surged 5.66 percent.

The Capped Materials Index added 0.49 percent, with Agnico Eagle Mines Limited (AEM.TO) up 2.30 percent, Agrium Inc. (AGU.TO) down 2.55 percent, and Potash Corp. of Saskatchewan Inc. (POT.TO) shedding 1.67 percent. Franco-Nevada Corp. (FNV.TO) gathered 1.66 percent.

Silver Wheaton (SLW.TO) gained 1.35 percent, after reports indicated Glencore to be in talks to sell portions of the future production of three South American copper mines to some Canadian companies, including Silver Wheaton.

The Capped Health Care Index moved up 1.68 percent, as Valeant Pharmaceuticals International (VRX.TO) jumped 3.32 percent, Extendicare Inc. (EXE.TO) moved up 0.13 percent, and Concordia Healthcare Corp. (CXR.TO) gathered 1.56 percent.

The Capped Information Technology Index inched up 0.18 percent, as BlackBerry Limited (BB.TO) fell 1.09 percent, and Descartes Systems Group (DSG.TO) fell 0.67 percent.

Constellation Software (CSU.TO) gained 0.84 percent, Sierra Wireless (SW.TO) moved up 2.71 percent and Avigilon (AVO.TO) slipped 0.25 percent.

The Capped Telecommunication Index dipped 0.07 percent, as Rogers Communication (RCI-B.TO) gained 0.20 percent, BCE Inc. (BCE.TO) edged up 0.07 percent, and TELUS Corp. (T.TO) dipped 0.09 percent. Manitoba Telecom Services Inc. (MBT.TO) shed 0.45 percent.

The Capped Industrials Index inched up 0.04 percent, as Bombardier (BBD-B.TO) added 3.51 percent, Finning International Inc. (FTT.TO) shed 0.58 percent, and Air Canada gathered 2.93 percent.

On the economic front, a Labor Department report on Thursday showed initial jobless claims dropped to 264,000, a decrease of 11,000 from the previous week's unrevised level of 275,000. Economists expected jobless claims to come in unchanged.

New residential construction in the U.S. decreased in August, with housing starts dropping 3.0 percent to an annual rate of 1.126 million in August from the revised July estimate of 1.161. Economists expected housing starts to drop to a rate of 1.168 million from the 1.206 million originally reported for the previous month, reflecting a 3.2 percent decrease.

The Federal Reserve Bank of Philadelphia on Thursday said the headline index of regional manufacturing activity unexpectedly dropped, with the Philly Fed's diffusion index of current activity tumbling to a negative 6.0 in September from a positive 8.3 in August. The negative reading indicates a contraction in manufacturing activity. Economists expected the index to dip to a positive 6.3.

Elsewhere from Europe, eurozone construction output rebounded in July, logging the biggest growth in two years, Eurostat reported Thursday. Construction output grew 1 percent in July from June, when it fell 1.2 percent. This was the fastest growth since August 2014, when it rose 1.1 percent.

U.K. retail sales in August grew for the first time in three months as school uniform sales boosted clothing turnover. Retail sales including automotive fuel advanced 0.2 percent month-on-month in August after staying flat a month ago, data from the Office for National Statistics revealed Thursday. This was in line with economists' expectations.

From Asia, Japan posted a merchandise trade deficit of 569.659 billion yen in August, the Ministry of Finance said on Thursday. That missed forecasts for a shortfall of 542.5 billion yen following the 268.4 billion yen deficit in July.