TSX Looks For Direction As BoC Hikes Key Interest Rate Bay Street stocks may witness a volatile session Tuesday amid mixed cues from the commodities markets and as traders were digesting the just released interest rate decision by the Bank of Canada. Today, BOC hiked its target for the overnight rate to 0.50%, as widely expected.
Moreover, cues from the global stock markets were also not encouraging with the European market dipping nearly 2%. Oil giant BP Plc. plummeted around 15%, shedding nearly $23 billion of its market capitalization, after a failed attempt to plug its oil spill.
Meanwhile, unemployment in the euro zone climbed to a record high of 10.1% in April, from 10% in March.
On Monday, the S&P/TSX Composite Index gained 91.54 points or 0.78% to 11,762.99.
The price of crude oil moved down for a second session amid lingering worries over the growth in the global economy. Earlier today, the state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to 53.9 in May from 55.7 in April and 55.1 in March. Economists were expecting a reading of 54.5. Crude for July delivery dipped $1.60 to $72.37 a barrel.
Meanwhile, the price of gold moved up on safe haven buying, with gold for August delivery adding $13.0 to $1,228.0 an ounce.
In corporate news, Canada's third-largest lender by asset Scotiabank said its second-quarter net income jumped to C$1.02 per share from C$0.81 per share in the year ago quarter. Net interest income for the quarter declined to C$2.05 billion from C$2.08 billion in the comparable period, while total revenue for the quarter grew to C$3.87 billion from C$3.59 billion in the earlier period.
Excluding one-time items, Scotiabank's net income were at C$1.04 per share that came in much higher than the consensus estimates for a net income of C$0.93 per share.
Integrated energy company Husky Energy said its subsidiary Husky Oil China Ltd. has completed drilling and successful testing of the first appraisal well in the South China Sea with encouraging results. The company said the first appraisal well tested natural gas at an equipment restricted rate of 55 million cubic feet per day with indications that the well's future deliverability could be 60 -70 million cubic feet per day.
Energy sector focused investment trust Zargon Energy Trust said it acquired about 6.9 thousand net acres of undeveloped land in southern Alberta, consisting of medium and heavy gravity oil pools with about 350 barrels of oil equivalent per day, for $25 million.
Book retailer Indigo Books & Music reported improved fiscal 2010 net earnings of C$1.39 per share compared to C$1.21 per share last year.
Diamond mining company Rockwell Diamonds reported a narrower fiscal 2010 net loss of C$0.03 per share compared to a loss of C$0.05 per share in fiscal 2009.
Gold and silver explorer Genco Resources said that it move to back to full mining production at La Guitarra mine as it has now been granted authority to purchase explosives for mining operations.
In economic news, Bank of Canada hiked its target for the overnight rate by 0.25% to 0.50%. The bank rate was correspondingly raised to 0.75%, while deposit rate was kept at 0.25%. Economists were expecting the bank to raise its target rate for overnight loans between commercial banks to 0.50% from 0.25%
Yesterday, data from Statistics Canada revealed that the country's GDP grew 6.1% at an annualized pace in the first quarter 2010, beating economists expectations for a 5.9% expansion.
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