Trader Ryan Falvey works on the floor of the New York Stock Exchange, Wednesday, Sept. 9.Richard Drew/The Associated Press
Canadian stocks rose a second day on Wednesday as equities rallied around the world, led by gains in China and Japan's strongest rally since 2008.
Canada's benchmark index jumped as much as 1 per cent before giving back some gains after the Bank of Canada maintained its main interest rate at 0.5 per cent. The central bank has made two cuts this year amid the plunge in oil prices.
Canadian shares followed global markets higher. A gauge of developed and developing equity markets increased 1.2 percent as Japan's Nikkei 225 Average soared 7.7 per cent, the most since October 2008, amid speculation a selloff that drove valuations to an 11-month low was overdone. Equities rallied a second day in China, Canada's second-largest trading partner.
The Standard & Poor's/TSX Composite Index rose 42.04 points to 13,672.71 at 11:37 a.m. in Toronto. The equity gauge has pared its drop this year to 6.4 percent.
"In this market the overall sentiment can change very quickly," said Prab Sagoo, a Canadian equity market analyst at Nasdaq Advisory Services on the phone from Montreal.
Stephen Poloz, governor of the central bank, was expected to leave its main interest rate unchanged in its lone decision during the Canadian federal election campaign. In its decision the Bank of Canada said a weaker currency and household spending are leading a recovery from the shock of lower oil prices.
Global shares are rebounding from the worst month since May 2012, as the MSCI World All-Country World Index tumbled 7 percent in August after Chinese stocks slumped amid increasing concern economic growth in the country was stalling.
The resource-rich S&P/TSX has been one of the worst- performing developed markets in the world this year as crude plunged. Energy and raw-materials producers have the biggest declines among 10 industries in the S&P/TSX this year.
Manulife Financial Corp. climbed 1.8 per cent after the insurer was said to have agreed to buy Standard Chartered Plc's Hong Kong pension business for about $400-million, according to a person with knowledge of the matter. Financial services stocks climbed 0.7 per cent for a second straight daily advance. Royal Bank of Canada increased 1.3 percent.
Bombardier Inc. jumped 9.2 per cent to pace gains among industrials stocks. The company said its transportation rail unit wasn't for sale after a report the maker of planes and trains had rejected an offer by a Chinese company. Railway operator Canadian National Railway Co. increased 1.1 per cent.
U.S. stocks fluctuated on Wednesday , after the Standard & Poor's 500 Index briefly erased last week's losses, as an early rally sparked by gains in Japan and China faded.
Advances among banks and energy shares were offset by declines in health-care and semiconductor companies as markets took a breather following the second-strongest rally of 2015 on Tuesday. The Nasdaq Biotechnology Index slipped 1 per cent after a 4.2 percent jump Tueday.
The S&P 500 Index added 0.3 per cent to 1,974.67 at 11:13 a.m. in New York, after earlier rising as much as 1 per cent. The gauge surged 2.5 per cent Tuesday. The Dow Jones Industrial Average gained 42.36 points, or 0.3 per cent, to 16,535.04. The Nasdaq Composite Index advanced 0.2 percent after climbing 1.1 percent earlier.
"It looks like good news is being perceived as bad news," said Brent Schutte, senior investment strategist at BMO Global Asset Management in Chicago, which manages $250-billion. "People now are are paying attention to the data because that's what the Fed told them to do. This could bring the Fed hike back into the picture."
U.S. data showed job openings surged to a record in July, a sign employment will keep climbing. The number of positions waiting to be filled jumped by 430,000, the biggest gain since April 2010, to 5.75 million. Economists surveyed by Bloomberg forecast 5.3 million openings.
Equities in China roseas the finance ministry pledged to accelerate construction of some major projects and reduce companies' tax burden, while stocks in Tokyo staged the biggest rally since 2008 amid speculation a selloff that drove valuations to an 11-month low was overdone.
Wide market swings and rapid shifts in investor sentiment have become more prevalent since China's currency devaluation on Aug. 11 sparked concerns that a slowdown in the world's second- largest economy would spread. The S&P 500 Tuesday regained almost three-quarters of its 3.4-per-cent slide last week, which was the second-biggest retreat since December behind the 5.8-per-cent plunge it suffered in the five days through Aug. 21. In 10 of the last 13 days, the benchmark has closed with a move of at least 1.3 percent.
The Chicago Board Options Exchange Volatility Index Tuesday snapped a streak of 11 straight sessions above 25, a level that before August it touched on just five days since 2011.The measure of market turbulence known as the VIX fell 2 per cent Wednesday to 24.40.
Investors remain confident the Federal Reserve will raise borrowing costs this year, even as they pare bets on a move at next week's meeting. Traders are pricing in a 28-per-cent chance the central bank will increase rates this month, down from 48 per cent before China's devaluation. Odds of a move at the December gathering are about 60 per cent, according to data compiled by Bloomberg.
A Bank of America study showed that the Fed rarely makes a move amid the level of recent equity turbulence. In four tightenings since 1990, including the tapering of bond purchases announced in 2013, the S&P 500 had posted positive returns over the prior three and six month periods, and was within 3 per cent of the gauge's 52-week high, according to the report. By comparison, the benchmark index is down 5.3 per cent over the last three months and is 7.5 per cent below its high of 2,130.82 reached in May.