TSX notches 12-day high as oil jumps, Fed hikes as expected

·2 min read
The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index rallied to its highest level in nearly two weeks on Wednesday, as a jump in oil prices bolstered energy shares and the Federal Reserve met market expectations by hiking interest rates by half a percentage point.

The Toronto Stock Exchange's S&P/TSX composite index ended up 279.67 points, or 1.3%, at 21,184.95, its highest closing level since April 22.

U.S. stocks also closed sharply higher after the Fed announced the biggest rate increase since 2000 and said it would begin shrinking its $9 trillion asset portfolio next month in an effort to further lower inflation.

"The market had been pricing in a hawkish Fed for the entirety of 2022 and investors had been aggressively derisking and deleveraging their portfolios in anticipation," said Brandon Michael, senior investment analyst at ABC Funds.

"With this major monetary policy announcement now in the rear view mirror and investors gaining more clarity on interest rates this could precipitate a pivot from risk-off to risk-on market action."

The energy sector climbed 2.4% as the European Union spelled out plans to phase out imports of Russian oil, boosting oil prices. U.S. crude oil futures CLc1 settled 5.3% higher at $107.81 a barrel.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.7%, with B2Gold Corp Barrick Gold up over 2% each following upbeat earnings.

All 10 of the Toronto market's major sectors gained ground.

Among stocks that declined was Iamgold Corp, which plunged 25.1% after the release of quarterly results. Shares of Loblaw Companies Ltd fell 1.2% after the retailer missed Wall Street estimates for first-quarter revenue.

Canadian data showed Canadian exports and imports climbing to record highs in March, adding to recent evidence of strong economic activity.

(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Andrea Ricci)

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