TORONTO — The Toronto stock market was sharply higher Wednesday amid a surprise rate cut by the Bank of Canada and increased confidence about what the European Central Bank may deliver in the form of another round of economic stimulus on Thursday.
The S&P/TSX composite index jumped 228.31 points to 14,536.75, led by a sharp rise in energy stocks as oil prices advanced.
The Canadian dollar fell 1.12 cents US to 81.48 cents US afterthe Bank of Canada cut its key rate to 0.75 per cent from one per cent due to economic fallout from the collapse in oil prices.
Markets had universally expected the bank to leave the rate unchanged.
It was the second day of sharp declines for the loonie _ a combination of falling oil prices, a weak manufacturing report and an economic downgrade from the International Monetary Fund pushed the loonie down more than one U.S. cent Tuesday.
Oil prices have plunged 55 per cent since last June amid a glut of supply and have fallen about 40 per cent just since the end of November after OPEC concluded their last meeting with a vow to leave production levels unchanged.
New York indexes were mixed after the Wall Street Journal reported that the board of the European Central Bank is proposing a substantial program of quantitative easing, which involves a massive round of government bond purchases. The WSJ said the bank would spend about euro50 billion monthly on the program. Markets had been speculating the central bank would announce a program involving spending between euro500 billion and euro700 billion annually.
Economic growth has been tepid and there have been worries that the region could fall prey to deflationary pressures, a situation where businesses and consumers hold off on purchases in the hope that items will just get cheaper.
The Dow Jones industrials was down 25.91 points to 17,489.32 — dragged down by an earnings miss from IBM. The Nasdaq edged up 5.2 points to 4,660.05 and the S&P 500 index gained 2.67 points to 2,025.22.
But uncertainty about bank intentions grew after central bank council member Ewald Nowotny said people ``should not get overexcited'' about Thursday's meeting of the ECB, adding that policy makers and central bankers should be centered on longer-term views.
The energy sector led advancers, up four per cent as crude oil prices advanced ahead of the latest U.S. inventory figures from the Department of Energy which are being released later in the morning. The March crude contract in New York gained $1.07 to US$47.54 a barrel.
The base metals group gained 2.5 per cent with March copper up one cent to US$2.60 a pound.
Most TSX sectors were higher with added support coming from industrials and financials.
The gold sector shed one per cent while February gold faded $4.10 to US$1,290.10 an ounce, giving up early gains after the ECB report.
After the close Tuesday, electronics manufacturer Celestica (TSX:CLS) posted a quarterly net loss of US$4.4 million or three cents per share, compared with net earnings of US$22.1 million or 12 cents per share in the fourth quarter of 2013. Revenue declined slightly to US$1.424 billion from US$1.436 billion and its shares gained 11 cents to C$13.81.