Canadian Stocks Are Up After Rates Remain Unchanged -- Canadian Commentary

(RTTNews) - The Canadian stock market is up in early trade Wednesday, extending its gains from the previous session. However, the market is off its early highs as early enthusiasm has begun to fade. Weakness in commodities is also limiting the upside move.

The strong performance of the Asian markets overnight, particularly the 7.7 percent surge in Japan's NIKKEI 225, sparked a sharp gain at the open. China's Shanghai Composite Index also jumped by 2.3 percent, adding to the 2.9 percent gain posted in the previous session. The continued strength among Chinese stocks is partly due to optimism that the government will take additional steps to support the economy.

The Bank of Canada kept interest rates unchanged at 0.5 percent, which was in line with expectations. The Bank lowered its rate in July and again in January.

The consumer price inflation remained near the bottom of the target range, reflecting year-over-year price declines for consumer energy products, the statement showed.

Meanwhile, the bank judged it prudent to have stimulative effects of previous monetary policy to work their way through the Canadian economy.

"Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada's economy," it noted.

Markets in Europe are trading in the green, but are also off their session highs. Early strength from the strong performance in Asia has also begun to erode. U.K. industrial and manufacturing output also logged an unexpected decline in July.

Early gains in the United States have also begun to recede. Economic data in the U.S. remains sparse and will remain so until Thursday. Investors are also looking ahead to the Federal Reserve policy meeting next week.

The benchmark S&P/TSX Composite Index is up 53.57 points or 0.39 percent at 13,684.24.

On Tuesday, the index closed up 152.36 points or 1.13 percent, at 13,630.67. The index scaled an intraday high of 13,509.95 and a low of 13,414.58.

The Diversified Metal and Mining Index is climbing by 2.69 percent. HudBay Minerals (HBM.TO) is gaining 0.63 percent and First Quantum Minerals (FM.TO) is surging by 4.33 percent. Sherritt International (S.TO) is increasing by 3.33 percent.

Capstone Mining (CS.TO) is up 2.94 percent. The company announced that it has lowered 2015 operating mine site capital expenditures relative to previous guidance by approximately $20 million. Capstone also plans to reduce mine site operating costs by $20 million in the second half of the year and has suspended work on the Santo Domingo project.

The heavyweight Financial Index is rising by 0.78 percent. National Bank of Canada (NA.TO) is increasing by 0.91 percent and Bank of Montreal (BMO.TO) is gaining 0.52 percent. Canadian Imperial Bank of Commerce (CM.TO) is higher by 0.28 percent and Royal Bank of Canada (RY.TO) is advancing by 1.12 percent. Bank of Nova Scotia (BNS.TO) is climbing by 0.29 percent and Toronto-Dominion Bank (TD.TO) is up 0.88 percent.

The Capped Industrials Index is up 0.66 percent. Finning International (FTT.TO) is increasing by 0.97 percent and Air Canada (AC.TO) is gaining 2.79 percent. Canadian National Railway (CNR.TO) is adding 1.06 percent.

Canadian Pacific Railway (CP.TO) is falling by 0.11 percent, after it announced a $1.2 billion debt offering.

Bombardier (BBD-A.TO) is surging by 8.46 percent, on reports that it has rebuffed a Chinese offer to buy up to 100% of its rail business.

The Energy Index is increasing by 0.17 percent. Crude oil prices were lower Wednesday morning as equities rallied in early trade. Rebounding stocks could mean the Federal Reserve will raise interest rates next week.

Cenovus Energy (CVE.TO) is rising by 0.17 percent and Enbridge (ENB.TO) is climbing by 0.72 percent. Canadian Oil Sands (COS.TO) is up 0.46 percent and Crescent Point Energy (CPG.TO) is adding 0.85 percent. Suncor Energy (SU.TO) is higher by 0.65 percent.

Encana (ECA.TO) is up 3.61 percent, after it provided its mid-third quarter update.

The Capped Information Technology Index is gaining 0.18 percent. BlackBerry (BB.TO) is increasing by 0.62 percent and Descartes Systems Group (DSG.TO) is also adding 0.30 percent. Avigilon (AVO.TO) is also rising by 0.66 percent.

The Gold Index is falling by 1.83 percent. Gold prices continued to nudge lower Wednesday morning amid increased risk appetite as global stocks rebounded.

Barrick Gold (ABX.TO) is losing 1.98 percent and Kinross Gold (K.TO) is decreasing by 2.39 percent. Yamana Gold (YRI.TO) is declining by 2.74 percent and Royal Gold (RGL.TO) is down 0.71 percent. IAMGOLD (IMG.TO) is also lower by 0.49 percent.

Goldcorp (G.TO) is dropping by 2.54 percent, after it lowered production guidance from its Éléonore mine. Higher than expected folding was being encountered.

The Capped Materials Index is also down 0.66 percent. Franco-Nevada (FNV.TO) is falling by 2.35 percent and Agnico Eagle Mines (AEM.TO) is losing 4.61 percent. Silver Wheaton (SLW.TO) is dipping by 0.06 percent.

The Capped Telecommunication Services Index is declining by 0.09 percent. Sandvine (SVC.TO) is sinking by 13.33 percent, after it announced that it expects revenue for its third quarter to be approximately $27 million.

The Capped Health Care Index is falling by 0.21 percent. Valeant Pharmaceuticals International (VRX.TO) is losing 0.93 percent.

Enghouse Systems (ESL.TO) is up 0.14 percent, after it has acquired Stockholm, Sweden -based Aktavara AB.

On the economic front, the Canada Mortgage and Housing Corp. reported Wednesday morning that Canadian housing starts increased by 12.2 percent in August, to an annual rate of 216,924 units. Economists had been expecting an increase to an annual rate of 190,500 units.

Statistics Canada also reported that Canadian building permits declined by 0.6 percent in July to C$7.74 billion. Building permits had surged by 15.5 percent in June. Economists had expected building permits to fall by 5.0 percent in July.

U.K. industrial production dropped unexpectedly and the visible trade gap widened to the highest level in a year in July largely due to a strong pound, suggesting a weak start to the third quarter.

Industrial output dropped 0.4 percent on a monthly basis in July, having had an equivalent fall in the prior month, the Office for National Statistics said Wednesday. Economists had forecast 0.1 percent growth for July. This was the second consecutive fall in production.

UK visible trade deficit widened for a second straight month in July to its biggest level in a year, exceeding economists' expectations, figures from the Office for National Statistics showed Wednesday. The deficit in the trade in goods rose to GBP 11.082 billion from GBP 8.507 billion in June. Economists had forecast a GBP 9.5 billion shortfall.

British shop prices declined for the twenty-eighth consecutive month in August, defying expectations for a slower drop, the British Retail Consortium said on Wednesday. Shop prices fell 1.4 percent year-over-year in August, the same rate of decrease as in the previous month. Economists had forecast only a 0.2 percent drop for the month.

In commodities, crude oil futures for October delivery are down $0.69 or 1.50 percent at $45.25 a barrel.

Natural gas for October is down 0.045 or 1.66 percent at $2.665 per million btu.

Gold futures for December are down $10.00 or 0.89 percent at $1,111.00 an ounce.

Silver for December is down $0.055 or 0.37 percent at $14.70 an ounce.