Energy stocks, oil push TSX ahead

The Toronto stock market soared to a triple-digit advance Wednesday after two days of heavy losses as oil prices rose and energy stocks gained.

The Toronto Stock Exchange’s S&P/TSX composite index rose 163.56 points to end the day at 13,863.16.

New York markets were also up after the U.S. Federal Reserve announced it was keeping interest rates steady.

The Dow Jones industrial average rose 198.09 points to close at 17,779.52, while the broader S&P 500 added 24.46 points to 2,090.35 and the Nasdaq gained 65.54 points to 5,095.69.

In its latest policy statement, released Wednesday afternoon, the U.S. central bank said it would not raise interest rates and was closely monitoring the health of the American economy as it looks ahead.

The Fed has kept its benchmark rate near zero since December 2008, a move that has been credited with creating some of the liquidity that has since powered the stock market recovery.

Gareth Watson, director of the investment management group at Richardson GMP Ltd., said there are two schools of thought on the potential impact of the Fed’s decision not to change rates. For some, he said, the decision to keep rates low means money remains cheap to borrow, making it easier to invest in stocks and less attractive to park money in low-interest savings products.

A second school of thought, he said, is that the Fed has been keeping rates low for such a long time that there are concerns that the central bank has left itself little room to manoeuvre if the United States does hit a rough patch.

“Historically, no move or no hint of rate increase is a good thing, but that might be changing now because it’s been going on for so long,” Watson said.

On commodity markets, the December contract for benchmark crude oil rose $2.74 (U.S) to end trading at $45.94 a barrel, while December natural gas fell 6.3 cents to $2.298 per million British thermal units and December gold added $10.30 to $1,176.10.

Energy stocks responded to the rebound in crude prices as Pemex, the national oil company of Mexico, said it had received permission to swap crude oil with the United States. Observers see that as a possible step toward ending the U.S. ban on crude exports.

The energy subsector of the TSX rose 2.67 per cent on the day, the second-largest rise on the index. The New York Stock Exchange’s energy index gained 2.21 per cent.

The Canadian dollar fell sharply after the Fed announcement, yet still ended the day up 0.42 of a cent (U.S.) at 75.80 cents.