Canada Stocks Fluctuate With Fed Interest Rate Decision Looming

In late afternoon, the Canadian dollar was valued at 76.17 U.S. cents, but it sank to 75.87 at the close.

The Toronto Stock Exchange’s S&P/TSX composite index was up 94.98 points, or 0.69 percent, at 13,810.81.

The energy sector was the leading advancer, up more than 1.38 per cent as the October contract for benchmark oil rose 72 cents to US$44.72 a barrel. December gold fell $2 to US$1,117.00 an ounce, while December copper was unchanged at US$2.452 per pound. The Fed will announce Thursday whether it will stand pat on interest rates – at historic lows near zero since the recession – or begin hiking them for the first time in nearly a decade.

American markets seemed rejuvenated after dipping Monday amid interest rate worries ahead of the two-day policy rate meeting of the U.S. Federal Reserve, which starts Wednesday.

The Dow Jones average of 30 stocks was down 10.39 oints at 16,729.56, the broader S&P 500 index declined 0.2 point to 1,995.29 and the Nasdaq index gained 7.71 points to 4,896.95.

However, the Fed, in language it has used before, said rates would only rise when it sees further improvement in the labour market and is “reasonably confident” that inflation will move back to the Fed’s optimal inflation target of two per cent.

The Fed’s statement was optimistic about the USA economy and that might also be good news for Canada as US growth is helping our exports. (CPG.TO) rose 5.7 percent as energy stocks jumped 4.2 percent, the most since August 27.

“Yellen wants to make sure that the USA remains the driver of global economic health”, said Dan Veru, who helps oversee US$5 billion as chief investment officer at Palisade Capital Management.

In corporate news, the world’s two biggest brewers could be joining forces after Anheuser-Busch InBev disclosed it has made a takeover approach to SABMiller PLC.

Macquarie analysts said investors should look beyond the hike/no-hike binary for signs including guidance via forecast, news conference rhetoric and number of dissenters.