Canadian shares jumped on Wednesday, paring this year’s retreat, as a rally in commodities prices lifted energy producers and as the Federal Reserve started a two-day discussion over the timing of an interest-rate hike.
The Standard & Poor’s/TSX Composite Index (TSE:OSPTX) rose 1.7% to 13,686.79 at 11:17 a.m. in Toronto. Twenty shares advanced for every issue that declined as nine out of ten share groups were in negative territory.
The gauge has lost 6.5% so far this year.
The Fed’s two-day meeting is due to start Wednesday morning, and the central bank will reveal its decision on interest rates on Thursday afternoon.
The energy sector, the main index's second most heavily weighted group, was the largest advancer with a 4% gain. Suncor Energy (TSE:SU), Canada's largest oil sands producer, rose 3.6% to C$34.63. Enbridge (TSE:ENB), Canada's largest pipeline company, added 1% to C$50.97. Canadian Natural Resources Limited (TSE:CNQ), Canada’s second-largest energy producer, picked up 5.4% to C$27.74.
Freehold Royalties (TSE:FRU) rose 7.1% to C$11.25, erasing an earlier drop. The oil and gas company cut its monthly dividend to C$0.07 per share from C$0.09 per share, pointing to expectations for continued low oil prices.
Oil rose more than 5% on Wednesday after an unexpected drawdown in U.S. stockpiles. Front-month U.S. crude futures traded up 5.6% at $47.10 per barrel. Brent was up 4.9% at $50.09 a barrel.
The materials sub-index, which includes mining shares, rose 2.9% as gold rose.
Goldcorp (TSE:G), Canada’s largest gold miner by market value, advanced 5.2% to C$17.50.
Barrick Gold (TSE:ABX), Canada’s second-largest gold miner, gained 5.7% to C$8.76.
Spot gold was up 0.7% at $1,112.76 an ounce, while U.S. gold futures for December delivery were up $9.40 an ounce at $1,112.00.
The financials group, which accounts for approximately 34 percent of the main measure, more than any other group, shot up 1%.
Royal Bank of Canada (TSE:RY), which has the heaviest weighting in the index, rallied 1.1% to C$73.97, paring this year’s tumble to 7.8%. Toronto-Dominion Bank (TSE:TD), the second-largest bank by market value, tacked on 1.1% to C$52.64.
Nuvo Research (TSE:NRI) added 3.4% to C$5.45 after the pharmaceutical company said it plans to split into two separate, publicly traded companies – one a commercial healthcare company and the other a biotech development company.
In economic news, Canadian factory sales rose faster than economists predicted in July on gains in automobile and food production.