TSX Ends Lower After Fed Decision - Canadian Commentary

(RTTNews) - Canadian stocks ended lower Wednesday, after the U.S. Federal Reserve decided to further cut down its quantitative easing program as widely expected. Investors also continued to be wary over the emerging markets upheaval after data from China last week revealed sluggishness in the world's second largest economy.

As expected, the Federal Reserve went ahead with a second reduction, slashing its monthly bond buying program by $10 billion to $65 billion. The decision was an unanimous one, although recent Fed decisions have come with one dissenting vote, generally among hawkish members wanting more significant tightening.

"Information received since the Federal Open Market Committee met in December indicates that growth in economic activity picked up in recent quarters. Labor market indicators were mixed but on balance showed further improvement," the Fed said in a statement.

The Fed seems most concerned with low inflation, which has been running below its 2 percent target rate.

The decision came at the end of a two-day meet that will also mark the end of the Ben Bernanke era. Bernanke will step aside as Chairman after eight years, and is to be replaced by current Vice Chair Janet Yellen.

The S&P/TSX Composite Index closed Wednesday at 13,643.22, down 44.44 points or 0.32 percent. The index scaled an intraday high of 13,687.66 and a low of 13,587.29.

The Global Gold Index jumped 3.27 percent, with gold futures for February delivery, the most actively traded contract, gaining $11.40 or 0.9 percent to close at $1,262.20 an ounce Wednesday on the Nymex.

Among gold stocks, Goldcorp Inc. (G.TO) gained 3.83 percent, while Barrick Gold Corp. (ABX.TO) jumped 4.15 percent. Yamana Gold Inc. (YRI.TO) added 3.26 percent, while Kinross Gold Corp. (K.TO) gained 2.15 percent.

The Capped Materials Index gained 1.67 percent, with fertilizer giant Potash Corp. of Saskatchewan Inc. (POT.TO) down 0.42 percent.

Crude oil ended slightly lower after an official Energy Information Administration weekly report showed a more than expected jump in U.S. crude stockpiles, with gasoline and distillate inventories declining more than anticipated.

Data from the Energy Information Administration revealed US crude oil inventories to have moved up 6.40 million barrels, while gasoline stocks shed 0.80 million in the week ended January 24. Analysts expected crude oil inventories to gain 2.25 million barrels last week, with gasoline stocks anticipated to climb 1.6 million barrels.

The Energy Index dropped 0.68 percent, with U.S. crude oil futures for March delivery, the most actively traded contract, shed $0.05 to close at $97.36 a barrel Wednesday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) dropped 0.83 percent, while Suncor Energy Inc. (SU.TO) lost 0.76 percent. Talisman Energy Inc. (TLM.TO) surrendered 2.19 percent, while Encana Corp. (ECA.TO) dropped 0.79 percent.

The Information Technology Index dropped 1.59 percent, with smartphone maker BlackBerry Limited (BB.TO) slipping 0.54 percent.

The Diversified Metals & Mining Index slipped 0.43 percent, with Teck Resources Limited (TCK.B.TO) inched up 0.04 percent, Lundin Mining Corp. (LUN.TO) dropped 1.59 percent, and First Quantum Minerals (FM.TO) was down 0.15 percent.

The heavyweight Financial Index dropped 0.90 percent with Royal Bank of Canada (RY.TO) diving 1.11 percent and the Bank of Nova Scotia (BNS.TO) shedding 0.86 percent. Bank of Montreal (BMO.TO) dropped 0.47 percent, Toronto-Dominion Bank (TD.TO) shed 0.73 percent, and Manulife Financial Corporation (MFC.TO) lost 1.17 percent.

The Capped Industrials Index moved up 0.61 percent, although Bombardier Inc. (BBD.A.TO, BBD.B.TO) down 1.25 percent and Air Canada (AC.B.TO) declining 6.03 percent.

Canadian Pacific Railway Limited (CP.TO, CP) jumped 4.33 percent after reporting a fourth-quarter profit of C$82 million or C$0.47 per share from last year's C$15 million or C$0.08 per share. Adjusted earnings came in at C$1.91 per share, while analysts expected C$1.93 per share for the quarter.

In economic news from the eurozone, German consumer confidence improved for the fifth month in a row in February as the domestic recovery gains momentum in the country, results of a survey by the market research group GfK said. The forward-looking consumer confidence index rose strongly to 8.2 points from an upwardly revised 7.7 points in January. The latest figure is the highest since August 2007. Economists had expected the score to remain unchanged at January's original reading of 7.6.

Separately, eurozone money supply growth eased unexpectedly in December, while loans to private sector declined for the 20th consecutive month, official data showed. M3, the broad monetary aggregate, grew 1 percent in December, after expanding 1.5 percent in November, the European Central Bank said. Economists were expecting the rate to rise to 1.7 percent.