TSX gains traction after Bank of Canada keeps rates unchanged

TORONTO — The Toronto stock market moved higher on Wednesday morning after the Bank of Canada left its key interest rate unchanged.The S&P/TSX composite index gained 19.65 points to 13,971.42, while the Canadian dollar fell 0.45 of a cent to 90.60 cents U.S.The central bank kept the interest rate at 1.0% and lowered its forecast for inflation, as was widely expected.In commodities, the February gold bullion contract slipped $1.30 to US$1,240.50 an ounce.Morgan Stanley has scaled back its expectations for gold prices over the next two years, saying that equity markets won’t need the safe haven of the precious metal as much as they did when the economies were more pained.The report cut target prices by 12% to US$1,160 an ounce in 2014 and 13% to $1,138 in 2015.On the TSX, gold stocks were down 1.1%.The energy sector gained 0.1% as the February crude oil contract moved up 79 cents to US$95.76 a barrel.Information technology stocks were the biggest gainer, rising 1.1%, with shares of BlackBerry ahead 48 cents to $11.36.BlackBerry announced on Tuesday it is selling the majority of its commercial real estate holdings in Canada, but the struggling smartphone maker refused to say how much it expects to make from the deals.The struggling smartphone maker has been trying to change the course of its money-losing operations under the leadership of new CEO John Chen.Meanwhile, Atlanta-based cloud computing company VMware says it is buying mobile computing company AirWatch for about $1.18 billion in cash. AirWatch has been one of BlackBerry’s most aggressive competitors for big business customers.On Wall Street, the Dow Jones industrials slipped 25.68 points to 16,388.76, the Nasdaq was 6.05 points higher to 4,231.81 and the S&P 500 index was ahead 1.76 points to 1,846.56.Weighing on the market were disappointing financial results from IBM Corp. after market close on Tuesday.IBM reported that fourth-quarter net income grew 6%, surpassing Wall Street’s expectations even though revenue declined. Chief executive Ginni Rometty said she’s recommending that senior executives, including herself, forgo personal bonuses for the year.Shares of IBM were down 3% to US$182.48.In other corporate developments, Air Canada says its domestic pension plans had a small surplus as of Jan. 1, according to preliminary estimates — contrasting with the $3.7-billion solvency deficit that they had a year earlier. Shares of the company were up 4%, or 36 cents, to $9.28.TransCanada Corp. says it will provide more details about the official startup of crude oil shipments on the southern portion of its controversial Keystone XL pipeline later today. TransCanada had previously announced Jan. 22 as the date for deliveries to U.S. refineries in the Gulf of Mexico region.TransCanada shares gained 22 cents to $48.69.In Europe, the FTSE 100 index of major British stocks fell 0.09% to 6,825 and Germany’s DAX inched up 0.03% to 9,773. The CAC-40 in France added 0.4% to 4,341.Japan’s Nikkei, the regional heavyweight, gained 0.2% to 15,820.96 and the Hang Seng in Hong Kong rose 0.2% to 23,082.25. read more

WatchThe temperature of Torontos cooling housing market just fell another couple of

TORONTO — The Bank of Canada’s interest rate hike could prolong the cooling-off period the Toronto housing market is experiencing following the implementation of a provincial foreign buyer tax, a prominent economist said Wednesday.But the recent drop in the number of home sales in the Greater Toronto Area — down 37.3 per cent in June from the year prior — is not expected to last long-term, said Benjamin Tal, deputy chief economist with CIBC World Markets.A similar slowdown occurred in the Vancouver area — another hot housing market — following the implementation of British Columbia’s foreign buyer tax a year ago, but Tal said the measure hasn’t deterred non-resident buyers and the market is rebounding.Consumers feel pinch as banks pass on full BoC hike, but not all the cutsToronto, Hamilton continue to fuel record gains in Canadian home pricesUninsured mortgages biggest risk for Canadian finance, DBRS warns“We haven’t seen a significant decline in foreign investment activity in Vancouver following the tax,” he said. “What led to the slowdown was really more domestic buyers waiting to see what the tax will do.”While Toronto should follow a similar trajectory, there are two other factors now at play, Tal said.“We also see interest rates going up and the regulators are talking about introducing more measures to slow down the market,” he said. “That’s why it’s possible the slowdown in Toronto will be more durable than the slowdown in Vancouver.”The Office of the Superintendent of Financial Institutions has proposed tighter rules that include requiring a qualifying stress test for all uninsured mortgages.While Tal said he supports the changes, he cautioned it might be prudent to reconsider the timing of their implementation, which is currently set for the fall.“Just not to shock the market too much, maybe we have to think twice about the timing of the changes,” he said.That advice doesn’t apply to Bank of Canada’s decision Wednesday to raise its key interest rate to 0.75 per cent from 0.5 per cent, he added, considering the many different economic agendas at play.The Ontario government released new data Wednesday that show foreign buyers were involved in seven per cent of residential real estate transactions in Toronto and nine per cent in York Region, a suburb north of the city, between April 24 and May 26, the month following the introduction of the foreign buyer tax.Tal said the figures show foreign homebuyers are having “non-trivial” impact, pushing up home prices in Toronto and surrounding areas, but added Canadian demand remains more dominant.“They also impact, indirectly, other regions, like Hamilton, Kitchener and even Barrie, because you have all those Toronto refugees who are impacted by that inflation caused by foreign buyers,” he said.The foreign buyer tax was one of 16 housing affordability measures the provincial government announced in April, including expanding rent control, allowing Toronto to impose a tax on vacant homes and using surplus provincial lands for affordable housing. read more