TORONTO - The Toronto stock market soared more than 300 points Wednesday with sentiment helped along by reassurance on interest rates from the U.S. Federal Reserve.
The S&P/TSX composite index jumped 351.87 points to 14,213.39, its second straight triple-digit advance and the biggest one-day gain since November 2011 as traders continued to buy up stocks oversold in the course of a steep fall sell-off triggered by plunging oil prices.
"Whether you characterize this as a relief rally or something a little different is hard to say," said Bob Gorman, chief portfolio strategist at TD Waterhouse.
"But certainly you had such a pummelling and, at some point, . . . you start to get a little sober second thought, people start running the numbers and not simply reacting as some players do, just pitching everything overboard."
The Canadian dollar dipped 0.02 of a cent to 85.92 cents US as the greenback strengthened after the Federal Reserve promised to be "patient" in determining when to raise its key interest rate. The Fed said that this approach is consistent with what it called its "previous" guidance that it expected to keep the rate near zero for a "considerable time."
It's generally expected the Fed will move to hike rates sometime next year, around mid-2015. But a string of strong economic data points, including November's blowout employment report, had suggested the Fed could move to increase rates sooner than expected.
The Fed also said that the timing of such increases depends on economic data.
U.S. indexes also bounded ahead as the Dow Jones industrials gained 288 points to 17,356.87, the Nasdaq rose 96.48 points to 4,644.31 and the S&P 500 index lifted 40.15 points to 2,012.89.
The gain on the TSX built on a solid, 156-point advance Tuesday as bargain hunters started to move in. The energy sector has been the biggest beneficiary, rising eight per cent Tuesday and another seven per cent Wednesday as oil prices gained for a second day, up 54 cents to US$56.47 a barrel.
The uptick raised hopes that a bottom is approaching to the plunge in oil prices. The price of crude has collapsed, falling some 50 per cent from summertime highs as the market sorts out a huge supply/demand imbalance.
Several companies have cut their capital expenditure budgets and cut dividends in response to the fall in oil prices.
On Wednesday, Husky Energy Inc. (TSX:HSE) said its 2015 capital budget will be $3.4 billion, about $1.7 billion less than it expects to spend this year on major projects. Its shares climbed $2.48 or 10.6 per cent to $25.48.
But gains also spread to other areas such as financials, up about 2.5 per cent over the last two sessions. The sector had sold off on concerns about the impact of falling oil prices on the Canadian economy and the exposure of banks to high-cost producers that took on a lot of debt to finance expansion.
The base metals group gained 6.65 per cent with March copper up one cent to US$2.87 a pound.
A major gainer was Sherritt International (TSX:S), which charged ahead 60 cents or 26.4 per cent to $2.87. Sherritt is a major investor in Cuba and its stock took off after President Barack Obama vowed "a new approach to Cuba." He detailed steps to begin normalizing relations with Cuba, including establishing a U.S. embassy in Havana and lifting many restrictions on travel and money transfers.
February bullion gained 20 cents to US$1,194.50 an ounce and the gold sector climbed about 5.7 per cent.