The S&P/TSX composite index jumped 154.63 points to 14,613.32 after the Bank of Japan unexpectedly expanded a key stimulus program.
It will increase its purchases of government bonds and other assets in the world's third-largest economy by between 10 trillion yen and 20 trillion yen (US$91 billion to $181 billion) to about 80 trillion yen (US$725 billion) in total annually.
Bank governor Haruhiko Kuroda said the increase was required to prevent a reversal into a "deflationary mindset" that the country's leaders contend has held back growth for many years. The bank judged the move necessary in the wake of weakening consumer demand following a consumption tax hike and the recent substantial decline in oil prices, which have been exerting downward pressure on inflation.
"At the very least it says central bankers are going to do everything they can to try to get growth going," said Philip Petursson, director of institutional equities at Manulife Asset Management.
"And that’s what it seems like in Japan — this is everything and the kitchen sink."
The Canadian dollar fell 0.6 of a cent to 88.72 cents US as Statistics Canada reported that gross domestic product dipped 0.1 per cent in August against the flat showing that economists had expected.
In New York, the Dow Jones industrials shot up 194.9 points to 17,390.32, and the S&P 500 index gained 23.4 points to 2,018.05 — both indexes ending the session at new highs — while the Nasdaq climbed 64.6 points to 4,630.74.
The move by the Japanese central bank comes at a point when the U.S. Federal Reserve is winding up its marquee stimulus program. It announced Wednesday that quantitative easing would end at the end of October.
Meanwhile, the TSX found support from the financial, tech and industrials sectors.
The energy sector was also positive, up 2.1 per cent even as December crude fell 58 cents to US$80.54 a barrel.
Imperial Oil (TSX:IMO) reported a 45 per cent jump in quarterly profit to $936 million or $1.10 a share, up from $647 million, or 76 cents per share, a year earlier. Revenue rose 12.4 per cent to $9.66 billion and its shares gained $2.42 to $54.23.
The base metals sector also gained 2.1 per cent as December copper dipped two cents to US$3.05 a pound.
Gold prices have been a major casualty of the Fed move to end QE. That is because the program of massive bond purchases had elevated inflation concerns. Traders had bought into gold as an inflation hedge but the program is now wrapping up and inflation is tame in most parts of the world.
"When you are absent inflation in any meaningful way, it's a real challenge to hold onto what has long been known as the best inflation hedge," added Petursson. "So the outlook for gold and gold companies continues to be negative."
Also working against gold and other commodity prices has been a higher U.S. dollar. A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are dollar-denominated.
The Toronto gold sector is down about 15 per cent this week alone, with December bullion falling $27 on Friday to US$1,171.60 an ounce.
The TSX ended last week ahead 69 points or 0.5 per cent as stocks continue to claw back some of the losses racked up during a sell-off that peaked mid-October.
The Dow industrials fared much better, gaining 585 points or 3.5 per cent.