TSX enjoys gains as Fed keeps rates steady

Investing.com - Canada’s major stock indexes ascended Wednesday after closing lower on Tuesday. Investors were keen to examine the U.S. Federal Reserve’s rate decision, in which the Fed decided to hold rates steady despite stubborn inflation.

By the 4:00 ET close, S&P/TSX 60 index was up 22.7 points or 1.53%, after decreasing 5.3 points or 0.4% on Tuesday.

The S&P/TSX Composite’s S&P/TSX composite index rose 363 points or 1.47% on the day, extending a recovery from a four-and-a-half-month low last Thursday.

On Wednesday, economists at BofA Securities projected Bank of Canada to impose an additional rate cut of 25 basis points to 2.50% in April.

Statistics Canada offered February’s CPI report on Tuesday, in which CPI jumped 2.6% in February, surpassing analyst expectations of a 2.1% increase.

However, a forecast from the OECD flagged that Trump’s plans to hike levies will hit growth in Canada, Mexico, and the United States while also pushing up inflationary pressures.

Analysts at Capital Economics argued that the outlook for Canadian financial markets widely depends on the reaction by the Bank of Canada to any fallout from the U.S. tariffs. Last week, the BoC slashed interest rates by 25 basis points and raised worries over inflation and weaker growth from the duties.

U.S. stocks enjoy boost

U.S. stocks enjoyed a rise on Wednesday, after slipping til close on Tuesday, seemingly reassured by the Fed’s decision to maintain their rate-cut forecast.

By the 4:00 ET close, the Dow Jones Industrial Average finished up 383.3 points or 0.9%, the S&P 500 closed higher by 60.6 points or 1.1%, and the NASDAQ Composite increased 246.7 points or 1.4%.

This follows negative results on Tuesday, as the Dow, S&P, and Nasdaq fell.

The Federal Reserve left interest rates unchanged Wednesday, and continued to forecast two rate cuts for this year even as it now expects a tougher battle against inflation. The Fed cited trade policy uncertainty, a still-strong labor market, and stubborn inflation as suggestions for their lack of urgency to alter monetary policy.

"[T]echnical conditions continue to favor bulls in the immediate term, although this source of upside pressure is being exhausted," analysts at Vital Knowledge said in a note to clients.

Oil mixed

Crude Oil prices advanced on Wednesday, after falling on Tuesday, as investors weighed the potential of Russian oil in global markets.

As of 5:10 ET, Crude Oil WTI Futures climbed 0.45% to $67.05 a barrel after Tuesday’s losses, while Brent Oil Futures were up down minimally by 0.01% to $70.91 after yesterday’s drop.

The major news of the day was that Russia agreed to U.S. President Donald Trump’s proposal that Moscow and Kyiv temporarily stop attacking each other’s energy infrastructure. This move could potentially allow Russian oil to enter global markets.

Israel launched extensive airstrikes across the Gaza Strip on Tuesday, marking the most significant escalation since the January ceasefire, with Prime Minister Benjamin Netanyahu authorizing the operations following stalled negotiations to extend the ceasefire and unresolved hostage situations.

Gold notches record high, continues rise

Gold prices continued rising on Wednesday after hitting another record high above $3,000 on Tuesday as heightened geopolitical ructions in the Middle East -- particularly the breaching of the Israel-Hamas ceasefire -- fueled safe haven demand.

By 5:10 ET, Gold Futures were up 0.54% to $3,057.25.