Canadian markets hovered around the break even point on Friday afternoon as investors considered Federal Reserve chairman Ben Bernanke's delay of stimulus discussions at a keynote speech held at the Fed's Kansas City annual retreat in Jackson Hole, Wyoming.
The S&P/TSX Composite Index rose 6.47 points, or 0.05%, to 12,290.78, while the more junior S&P/TSX Venture Composite was down less than a point, or by 0.02%, to 1,739.05 .
While another round of easing was widely unexpected, investors at least hoped that the Fed chairman would discuss other options to spur economic growth in the US, and give a better indication of the central bank's outlook on the US economy.
However, Bernanke put off discussions, only to say there were "a range of tools" available to the Fed to provide additional stimulus, which will all be considered at the Federal Open Market Committee meeting in September, which he said has been extended to 2 days instead of one, September 20 and 21, to allow for a "fuller discussion".
The speech noted how bouts of sharp volatility and risk aversion in markets on the back of the US fiscal situation, and European debt crisis has left an unclear picture.
"It is difficult to judge by how much these developments have affected economic activity thus far, but there seems little doubt that they have hurt household and business confidence and that they pose ongoing risks to growth," said Bernanke in his speech.
While US markets reacted negatively at first, all three main indices shot back up, as investors realized that if further stimulus was needed for economic growth, it would have been announced.
The Dow rose 1.2%, while the S&P 500 and the Nasdaq gained between 1% and 2.5%.
Earlier this month, the Fed announced it would keep interest rates at near-zero emergency levels until the middle of 2013 in light of low rates of resource utlization and a "subdued" outlook for inflation over the medium run.
Bernanke said that as economic growth during the first half of the year was considerably slower than expected, although the Fed expects a moderate recovery to continue and strengthen over time, the Committee has marked down its growth outlook for the coming quarters.
The chairman also criticized fiscal policy makers, referring to the debt ceiling negotiations in the US earlier in the summer.
"The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets."
Canada
Financials were weak on Friday, shedding more than 1%, as Royal Bank's (TSE:RY) third quarter results disappointed, with the bank posting a $92 million loss on the back of a hefty charge relating to the sale of its US retail banking operations to PNC Financial. Canada's largest bank by assets dropped around 2.5% just after lunch.
Toronto-Dominion Bank (TSE:TD) fell over 1%, while Bank of Nova Scotia (TSE:BNS) lost 0.86%.
In corporate news, Canada's uranium giant Cameco (TSE:CCO) (NYSE:CCJ) announced Friday that it intends to make an offer for junior Hathor Exploration (TSE:HAT), in a deal that values the target company at around $520 million.
The $3.75 per-share cash proposal was delivered in written form by Cameco to Hathor following the close of market last Friday, but Cameco, one of the world's largest uranium producers, said that it decided to make the offer announcement after discussions with Hathor failed to result in a board-supported agreement.
The offer price for Hathor represents a premium of 40% over the company's closing price yesterday. The company's shares have risen more than 46% on Friday.
Commodities
On the commodities front, gold futures for December rose 1.04%, to $1,781.60 per ounce. Light crude for October delivery shed 31 cents to $84.99 per barrel.