BUSINESS

TSX registers 2nd triple digit gain as European Central Bank launches stimulus

01/22/2015 08:04 EST | Updated 03/24/2015 05:59 EDT
TORONTO - The Toronto stock market chalked up a strong triple-digit gain for a second day Thursday after the European Central Bank announced a major stimulus program aimed at reviving a weak economic recovery and stopping the eurozone from slipping into a deflationary spiral.

The S&P/TSX composite index ran up 203.56 points to 14,763.98 after ECB president Mario Draghi said the bank is launching a program of quantitative easing that will involve spending 60 billion euros a month to buy investment grade sovereign bonds.

There had been hopes Draghi would announce such a measure, which is aimed at getting eurozone inflation up to the ECB target of two per cent. He added that the program will start in March and continue through September 2016.

But Draghi indicated the program is basically open-ended until inflation is back on track.

"I think had they not taken out the bazooka that we were all anticipating, that would have been a huge negative," said Allan Small, senior adviser at HollisWealth.

"Overall, it was widely expected."

The Canadian dollar was lower after the ECB announcement, adding to the 1.5 cent tumble Wednesday following the Bank of Canada's surprise quarter-point rate cut, which took a key lending rate to 0.75 per cent. The currency lost 0.45 of a cent to 80.62 cents US on Thursday.

But the rate cut helped push the TSX up 252 points on Wednesday. The gains from the past two sessions have lifted the TSX back into positive territory for the year.

New York markets also registered strong gains as the Dow Jones industrials rose 259.7 points to 17,813.98, the Nasdaq climbed 82.98 points to 4,750.4 and the S&P 500 index gained 31.03 points to 2,063.15.

The TSX tech sector was up 1.8 per cent as BlackBerry (TSX:BB) shot up $ or per cent to $ after the Financial Post reported that Samsung Electronics is actively pursuing a plan to take over or buy a significant stake in the Canadian company.

Industrials were ahead 1.75 per cent but as Canadian Pacific Railway (TSX:CP) shed 61 cents to $226.35 as it posted quarterly net income of $451 million, or $2.63 per share, up from $82 million, or 47 cents a share, a year earlier.

Adjusted earnings were $2.68 per share, 11 cents ahead of estimates, while revenue of $1.76 billion beat forecasts of $1.732 billion. However, CP also warned that 2015 profit could miss analysts' estimates as the slump in oil prices could affect crude shipments.

Mining stocks were mixed as the gold sector inched up 0.1 per cent as the February bullion contract ran ahead $7 to US$1,300.70 an ounce.

Financials were also positive but Royal Bank (TSX:RY) fell $1.90 to $74.71 as it moved to grow its wealth management business in the U.S. through an agreement to buy Los Angeles-based City National Corp. in a friendly cash-and-stock deal worth US$5.4 billion.

The TSX energy sector rose 0.9 per cent even as oil prices fell sharply amid Department of Energy data showing a much greater than expected rise in U.S. inventories last week. The March contract in New York fell $1.47 to US$46.31 a barrel as supplies jumped to an 80-year high of 10.07 million barrels versus the 2.7 million barrel rise that had been expected.

The base metals sector dipped 0.08 per cent as the March copper contact was three cents lower at US$2.58 a pound.

Note to readers: CORRECTS closing share prices for Canadian Pacific and Royal Bank