Canadian stocks continue to soar as central bank keeps rate steady

Canada's main stock market in Toronto continued advance Wednesday to a near four-week high as the Bank of Canada decided to keep its benchmark interest rate unchanged at 0.5 percent.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 89.93 points, or 0.66 percent, to close at 13,671.35 points. Six of the TSX index's eight main sub-sectors were higher.

Financial and industrial sectors rose 1.20 percent and 2.35 percent, respectively, as upbeat trade data from China supported sentiment.

China's exports in March grew for the first time in nine months, further adding to the signs of stabilization in the world's second-largest economy.

The most influential movers on the index included Royal Bank of Canada, which rose 1.36 percent to 76.77 Canadian dollars (59.90 U.S. dollars), and Bank of Nova Scotia, which advanced 1.77 percent to 63.65 Canadian dollars.

Bombardier Inc. added another 5.93 percent to 1.43 Canadian dollars a share, a day after the struggling Canadian aerospace manufacturer said Latvian carrier Air Baltic converted its remaining seven option aircraft to a firm order. This latest order brings the Latvian carrier's total firm orders to 20 CS300 aircraft.

The C-Series is "critical" to the survival of Bombardier's aircraft business, as one industry analyst put it, adding that Bombardier needs more than 1,000 C-Series orders for success.

The resource-dominant S&P/TSX remains tied to commodities prices, as crude and gold prices have found some footing in the second quarter after stumbling at the beginning of April.

Copper rose 1 percent to 4,816 U.S. dollars a metric ton, leading industrial metals higher after China, the world's biggest consumer, boosted foreign purchases to an all-time high.

Barrick Gold Corporation fell 1.49 percent to 20.56 Canadian dollars as spot gold fell more than 1 percent.

In a decision to maintain its target for the overnight rate, the Bank of Canada highlighted that growth in the global economy will increase gradually but not as much as the central bank previously expected.

The Bank of Canada's rate affects what Canadian borrowers and savers are offered from commercial banks on their loans and investments. Broadly speaking, the bank cuts rates when it wants to stimulate the economy, and hikes rates when it wants to pump the brakes on inflation.

After standing on the sidelines for years, the bank unexpectedly cut its benchmark rate twice last year in an attempt to stimulate a Canadian economy waylaid by low oil prices.

Since then, the economy has showed signed of improvement, however, as the cheap loonie, another for the Canadian dollar, has helped manufacturers and exporters, and oil prices have stabilized around the 40 U.S.-dollar level in recent months.

On March 22, the new Liberal government outlined a spending plan that will plunge Ottawa's books deep into the red, but devote part of that spending to infrastructure projects that should boost the economy.

While keeping rates steady for now, the bank hiked its forecast of how it expects the economy to perform this year.

In January, the bank forecasted 1.4 percent growth in the economy in 2016. That figure has been increased to 1.7 percent. For next year, the bank expects a growth of 2.3 percent.

The bank deciding to stand pat on the rate again was exactly what economists were expecting. But at least one said Wednesday the door is open to rate hikes down the line.

The Canadian dollar reacted positively to the rate decision, erasing earlier losses of about a third of a cent to trade hands virtually unchanged on the day.

By closing, the Canadian dollar traded lower at 0.7803 U.S. dollar, compared with Tuesday's closing rate of 0.7838 U.S. dollar. Endit