Manufacturing, oil, Fed help TSX
The main index of the Toronto Stock Exchange gained Wednesday as the Fed announced its rate decision, oil prices gained and Canadian manufacturing showed growth.
The Fed said it will still increase interest rates but at a slower pace than previously expected with just two hikes likely during 2016. Meanwhile oil prices were boosted by news that producers of around 73 per cent of the world’s oil will meet on April 17.
Canada’s manufacturing sales saw a 2.3 per cent rise in January according to Statistics Canada. The $53.1 billion total was boosted by gains for motor vehicles, food, and motor vehicle parts. Petroleum and coal products dropped 5.9 per cent in the month. In all, 80 per cent of Canada’s manufacturing sectors gained.
Around the world, stocks were mixed with Asia and Europe closing before the Fed. Europe was also affected by the UK budget which saw London stocks gain.
Wall Street closed higher on the Fed and oil.
The S&P/TSX Composite Index closed up 77.82 (0.58 per cent)
The Dow Jones closed up 74.23 (0.43 per cent)
Oil is trending higher (Brent $40.30, WTI $38.56 at 4.50pm)
Gold is trending higher (1264.10 at 4.50pm)
The loonie is valued at U$0.7611
Foreign investment in Canada gained in January
Foreign investors acquired $13.5 billion of Canadian securities in January, following a slight divestment in December. The investment activity in the month was concentrated in Canadian private corporate debt securities.
Meanwhile, StatsCan reported that Canadian investors sold a record $13.8 billion of foreign securities in January, mainly in the form of equities. The overall volume of Canadian cross-border purchases and sales transactions in foreign securities increased significantly in January compared with the previous months.
Higher corporate taxes mean lower tax revenue say academics
A study by the University of Calgary says that if corporate taxes are too high then revenues can be impacted. The research from the School of Public Policy suggests that provincial revenues are affected by businesses leaving for other areas and that lower taxes, but from more businesses, would make economic sense. The exception is Quebec due to language and cultural issues which make leaving less attractive even if taxes are higher.