Roundup: Canadian stocks rise as central bank holds rate steady

Canada's main stock market in Toronto rallied Wednesday as the Bank of Canada decided to keep its key interest rate on hold at 0.5 percent.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 81.85 points, or 0.61 percent, to close at 13,392.90 points. All of the TSX index's eight main sub-sectors moved higher.

The resource-linked market also got a boost from rebounding crude oil prices as a U.S. government agency report showed gasoline inventories drop more than expected.

The West Texas Intermediate for April delivery moved up 1.79 U.S. dollars to settle at 38.29 dollars a barrel on the New York Mercantile Exchange, while Brent crude for May delivery increased 1.42 dollars to close at 41.07 dollars a barrel on the London ICE Futures Exchange.

TSX energy and mining stocks were the leading advancers, up 1.25 percent and 1.70 percent respectively. Baytex Energy Corp. was up 7.59 percent, Canadian Natural Resources Limited jumped 3.87 percent, while Fortune Minerals Limited rocketed 28.57 percent.

Crescent Point Energy said it expected 2016 capital expenditure and production to be at the lower end of its forecasts and the company slashed its dividend. Crescent Point shares faded 43 cents, or 2.42 percent, to 17.35 Canadian dollars (13.09 U.S. dollars).

Imperial Oil Limited said it agreed to sell 497 remaining company-owned Esso retail stations to five fuel distributors for about 2.8 billion Canadian dollars. Imperial Oil took off 0.52 percent to 44.13 Canadian dollars per share.

Billionaire Bill Ackman on Tuesday called Valeant Pharmaceuticals a "very valuable asset" but forecast that if the company's situation does not stabilize soon, new management will be brought in or the company will be sold. Valeant shares acquired 4.54 percent to 88.80 Canadian dollars.

Telecom companies rose 0.80 percent as a group lifted by Axia NetMedia Corporation, which saw an unusual surge of 47.37 percent to 4.20 Canadian dollars a share as it announced that Partners Group agrees to acquire Axia for 4.25 Canadian dollars per share in going private transaction.

The Bank of Canada kept its benchmark interest rate unchanged at 0.5 percent as expected as the central bank will wait and see what Ottawa plans to spend on stimulating the economy in its March 22 federal budget before taking any further action.

The central bank said in a statement "the near-term outlook for the economy remains broadly the same as in January."

Still, the bank remains concerned about a number of things, including still "very weak" business investment due to massive retrenchment in the oil sands as well as rising "financial vulnerabilities."

"Financial vulnerabilities continue to edge higher, in part due to regional shifts in activity associated with the structural adjustment underway," the bank said.

Parts of western Canada are in recession, triggering tumbling real estate prices, rising bankruptcies and an outflow of workers drawn to Alberta's once-booming economy. The housing market remains red-hot in Vancouver and Toronto, creating fears about affordability and an eventual price collapse.

In January, the central bank forecast growth of 1.5 percent this year in Canada and 2.5 percent next year. The bank's next forecast is due out April 13, which will include an assessment of the impact of Ottawa's stimulus plan.

The bank cut its benchmark rate twice last year in an attempt to stimulate a Canadian economy that had been waylaid by tanking oil prices.

David Madani of Capital economics said in a note "we still think that a rate cut next month, to 0.25 percent, is a distinct possibility."

The Canadian dollar reacted positively to the news: after being slightly lower ahead of the decision, the loonie gained more than a penny to trade at 75.59 U.S. cents shortly after. A surprise cut would have sent the dollar tumbling.

By closing, the Canadian dollar was traded higher at 0.7547 U.S. dollar, compared with Tuesday's closing rate of 0.7454 U.S. dollar. Enditem