TSX Ends Higher On Bernanke Testimony - Canadian Commentary

(RTTNews) - Canadian stocks ended higher Wednesday, tracking rising global equity markets with the country's central bank leaving its key rates unchanged and as investors mulled the Federal Reserve Chairman Ben Bernanke's testimony before lawmakers on its monetary policy. Bernanke said the central bank anticipates beginning to taper bond purchases later this year, with the policy to remain accommodative and could change depending on the flow of economic data.

The Bank of Canada held its target for the overnight rate at 1 percent, as widely expected, with Canadian economic growth expected to be choppy in the near term owing to unusual temporary factors. The overall outlook is little changed from the Bank's projection in its April Monetary Policy Report. Canada's Annual GDP growth is projected to average 1.8 percent in 2013 and 2.7 per cent in both 2014 and 2015.

Addressing lawmakers on Capitol Hill Wednesday, Federal Reserve Chairman Ben Bernanke said the U.S. economic recovery has continued at a moderate pace but the jobs situation remains "far from satisfactory,"

"With unemployment still high and declining only gradually, and with inflation running below the Committee's longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future," Bernanke said in prepared remarks ahead of his semi-annual testimony before the House Committee on Financial Services.

Although vague about the time line for scaling back the Fed's $85 billion a month bond buying plan, Bernanke said he expects the program will be reduced by year's end. Nonetheless, he assured the asset purchases will be wound down gradually so as to not derail the fragile economic recovery.

The S&P/TSX Composite Index closed Wednesday at 12,568.77, up 56.58 points or 0.45 percent. The index touched an intraday high of 12,597.99 and a low of 12,518.96.

The Global Gold Index slumped 2.65 percent, with gold futures for August delivery dropping $12.90 or 1.0 percent to close at $1,277.50 an ounce Wednesday on the Nymex.

Among gold stocks, Yamana Gold Inc. (YRI.TO) slipped 3.43 percent, while Goldcorp Inc. (G.TO) dropped 1.88 percent. Barrick Gold Corp. (ABX.TO) lost 1.68 percent and. Kinross Gold Corp. (K.TO) shed 2.83 percent.

The Capped Materials Index shed 1.34 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) down 0.80 percent.

The Diversified Metals & Mining Index moved up 0.99 percent, with First Quantum Minerals Ltd. (FM.TO) gained 2.34 percent and Teck Resources Limited (TCK.B.TO) down 0.08 percent. Lundin Mining Corp. (LUN.TO) gained 1.95 percent, while Osisko Mining Corp. (OSK.TO) down 2.40 percent.

Latest data from the EIA revealed that US crude oil inventories moved down for a third week in a row, shedding 6.90 million barrels, while gasoline stocks were up 3.10 million barrels in the weekended July 12. Analysts expect crude oil stocks to shed 2.5 million barrels, while gasoline stocks are seen little changed.

The Energy Index gained 0.46 percent, with U.S. crude oil futures for August delivery gaining $0.48 or 0.5 percent to close at $106.48 a barrel Wednesday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) added 0.62 percent, while Enbridge Inc. (ENB.TO) gained 1.39 percent. Talisman Energy Inc. (TLM.TO) shed 0.17 percent, while Encana Corp. (ECA.TO) moved up 0.06 percent. Canadian Natural Resources Limited (CNQ.TO) gathered 1.34 percent.

The Financial Index added 1.05 percent with Manulife Financial Corp. (MFC.TO) up 0.28 percent and Bank of Montreal (BMO.TO) up 0.89 percent. Royal Bank of Canada (RY.TO) moved up 1.95 percent, while Toronto-Dominion Bank gained 0.81 percent. Bank of Nova Scotia (BNS.TO) added 1.59 percent.

The Information Technology Index added 0.37 percent, with BlackBerry (BB.TO) gathering 1.58 percent.

The Capped Industrials Index moved up 0.88 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) up 1.43 percent.

Oil and gas producer Pengrowth Energy Corp. (PGF.TO) jumped 8.44 percent after agreeing to sell its non-core assets for C$713 million, successfully achieving its C$700 million non-core asset disposition program previously announced in January. The proceeds will be used by the company to fully fund the first commercial phase of its $590 million thermal oil-sands project at Lindberg.

Pharmaceutical company Paladin Labs (PLB.TO) gained 0.69 percent after announcing that it has become the sole shareholder of Allon Therapeutics Inc. (NPC.TO) under the Bankruptcy and Insolvency Act.

Life and health insurance products company Industrial Alliance Insurance and Financial Services Inc. (IAG.TO) edged down 0.02 percent after announcing it would acquire all of the outstanding common shares of Jovian Capital Corp. (JOV.TO) at $10.23 per share for an aggregate consideration of $94 million. Shares of Jovian skyrocketed 44.26 percent.

In economic news, Statistics Canada foreign investment in Canadian securities slowed to $6.7 billion in May, mainly due to lower investment for all types of securities. Meanwhile, Canadian investors repatriated $1.6 billion in funds from international financial markets in May, led by the sale of US securities, the report said.

In economic news from the U.S., the Commerce Department said housing starts tumbled 9.9 percent to an annual rate of 836,000 in June from the revised May estimate of 928,000. The steep drop came as a surprise to economists, who had expected housing starts to climb to an annual rate of 951,000 from the 914,000 originally reported for the previous month. The Department also said building permits fell 7.5 percent to an annual rate of 911,000 in June from the revised May rate of 985,000.

Elsewhere, euro zone construction output fell 0.3 percent month-on-month in May, following a 1 percent rise in April, Eurostat reported. On a yearly basis, construction output declined 5.1 percent, but slower than the 6.8 percent drop seen in April.

The number of people claiming jobless allowance in the UK declined more than expected in June, the latest data from the Office for National Statistics showed. The claimant count for June was 1.48 million, down 21,200 from May. Economists expected the figure to fall by 8,000. The claimant count rate edged down to 4.4 percent in June from 4.5 percent in May.