By Amal S
(Reuters) – Canada’s main stock index was on course for its biggest percentage gain in two months on Wednesday as energy stocks climbed more than 3%, while investors focused on the U.S. Federal Reserve’s policy decision due later in the day.
The Toronto Stock Exchange’s S&P/TSX composite index added 0.75% to 20,395.51, set for its best day since July 21.
The energy group extended gains for a second straight session as crude prices climbed more than $1 after data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes. [O/R]
The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.6%. [MET/L]
Commodities and other risky assets rallied as China’s central bank injected cash into the banking system and on relief that the country’s debt-burdened Evergrande would pay interest on a domestic bond.
“Now with People’s Bank of China stepping in to support China’s financial system, commodities are bouncing back and that’s a positive for Canadian markets,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
Traders are tracking the Fed’s policy meeting for clues on when the U.S. central bank will begin to trim its massive pandemic-era stimulus measures.
“At some point the markets will ask why not, because if the economy is strong, and inflation is picking up and then one would think the Fed should be tapering, just like the Bank of Canada has been,” added Cieszynski.
The Canadian benchmark index, which has recorded seven straight months of gains, is on track to end September in the red amid concerns over slowing global growth, rising inflation and the spread of the Delta COVID-19 variant.
Aurora Cannabis Inc fell 1.9% after it said it will shut down a facility in Edmonton, Alberta, adding to the woes of the cash-strapped Canadian pot producer which has been reeling under the impact of the pandemic since last year.
Celestica Inc surged 12.6% to become the biggest percentage gainer on the TSX after the chipmaker agreed to buy PCI Ltd for $306 million in cash from Platinum Equity.
The TSX posted two new 52-week highs and no new lows.
(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)