U.S. Interest Rate Cut Spurs on Bay Street

Roger Biduk writes:

Stock markets closed sharply higher Tuesday after the U.S. Federal Reserve cut its key interest rate to a range of zero to 0.25 per cent - a record low, and down from the one per cent target in place since October.
In Toronto, the S&P/TSX composite index moved up 262.28 points to 8,724.11 as all sectors except health care turned positive.
The TSX Venture Exchange was up 6.65 points to 723.46.
The Cdn$ rose as much as 2.25 cents and closed with a gain of 2.02 cents at 83.21 cents US. The American currency weakened after the Fed made clear it will flood the system with greenbacks to encourage spending.

The TSX financial group turned positive after the Fed move, rising 1.5 per cent. But Bank of Montreal fell $2.22 or 6.8 per cent to $30.35 following news of a $1-billion-plus stock offering at $30 per share. It was the latest in a series of moves by the big banks to bolster their capital reserves.
Royal Bank (TSX:RY), which floated a $1-billion share issue last week, gained 65 cents to $34.90.

Statistics Canada reported manufacturing sales decreased 1.8 per cent in October to a seven-year low.

The TSX energy sector moved ahead 3.75 per cent although the January crude contract on the New York Mercantile Exchange slipped 91 cents to US$43.60 a barrel. Oil traders appear to have discounted an expected output-quota cut Wednesday by the Organization of Petroleum Exporting Countries.
On the TSX, EnCana Corp. (TSX:ECA) improved $2.87 to $57.82 and Suncor Inc. (TSX:SU) advanced $1.40 to $26.61.

The base-metal sector was up 3.25 per cent with Teck Cominco Ltd. (TSX:TCK.B) ahead 33 cents to $5.98 while Inmet Mining Corp. (TSX:IMN) climbed $1.93 to $19.42.

The industrial group gave major lift to the TSX, rising more than four per cent with Canadian National Railway (TSX:CNR) ahead $2.09 to $44.
The telecom sector was up slightly but Telus Corp. (TSX:T) declined a dime to $34.03 after disclosing it expects next year's operating profit will be flat while revenue grows four to six per cent. Telus also plans to boost capital spending by 12 per cent to $2.05 billion.

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