October 05, 2016 - 2:10 PM
TORONTO - Surging oil prices and signs that support an imminent rate hike from the U.S. Federal Reserve sent North American stock markets rallying Wednesday.
At the Toronto Stock Exchange, the S&P/TSX index advanced 89.57 points to 14,610.58, pushed higher by gains in metals and energy stocks.
On Wall Street, the Dow Jones industrial average was ahead 112.58 points at 18,281.03, as the banking sector climbed amid positive U.S. economic data.
The Institute for Supply Management reported that the services index jumped to 57.1 in September, the highest point since October, from August's 51.4, the lowest since 2010. It was the biggest monthly gain since the index was introduced in 2008. Any reading above 50 signals growth.
New orders, production and export orders all grew faster last month, and hiring by services companies was the strongest since October.
The figures provide more evidence for the Fed to hike interest rates from its ultra-low levels sooner rather than later. Most analysts believe such a move is likely to happen in December, following the U.S. presidential election.
Higher interest rates help banks increase its profits on lending.
"I would be surprised if they (the Fed) doesn't move in December based on the data we're seeing. I think they've postponed it (a hike) as much as possible," said Allan Small, a senior adviser at HollisWealth.
"(An increase) will tell the market that the Fed is on a path of higher rates and it will be a positive signal that the economy in the U.S. is doing well. If they do well, then we should benefit from their growth here in Canada."
Overall, the American economy has been struggling since late last year, even though the job market and consumer spending has been showing recent signs of strength.
Other indices were also positive, as the Nasdaq composite climbed 26.36 points to 5,316.02 and the broader S&P 500 composite index advanced 9.24 points to 2,159.73.
The Canadian dollar made a moderate jump, up 0.07 of a cent to 75.86 cents US, as oil prices forged ahead after the U.S. government reported that crude stockpiles surprisingly shrank last week.
Investors had expected stockpiles to grow. The November crude contract was up $1.14 at US$49.83 per barrel — the highest price it's been since late June, while November natural gas added eight cents at US$3.04 per mmBTU.
The December gold contract fell $1.10 to US$1,268.60 an ounce and December copper contracts were little changed at US$2.16 a pound.
— With files from The Associated Press
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News from © The Canadian Press, 2016