Canadian Stocks Move Notably Higher Following Interest Rate Cut

(RTTNews) - Canadian stocks turned in a strong performance during trading on Wednesday, as traders reacted to the Bank of Canada's widely expected decision to lowest interest rates.

The benchmark S&P/TSX Composite Index gave back ground after an early rally but moved back to the upside to end the day firmly positive. The index climbed 166.84 points or 0.8 percent to 22,145.02.

The rally on Bay Street came after the Bank of Canada announced it has decided to lower interest rates by 25 basis points, citing continued evidence that underlying inflation is easing.

The Bank of Canada reduced its target for the overnight rate to 4.75 percent, with the bank rate at 5.0 percent and the deposit rate at 4.75 percent.

The widely expected decision came as recent data has increased the Canadian central bank's confidence that inflation will continue to move towards its 2 percent target.

The bank's accompanying statement noted its preferred measures of core inflation has slowed, while three-month measures suggest continued downward momentum.

Nonetheless, the Bank of Canada noted risks to the inflation outlook remain and said its Governing Council is closely watching the evolution of core inflation.

Canadian stocks also benefited from optimism about the outlook for U.S. interest rates after payroll processor ADP released a report showing private sector job growth slowed by more than expected in the month of May.

With the tech-heavy Nasdaq surging to a record closing high, technology stocks saw substantial strength, driving the S&P/TSX Capped Information Technology Index up by 1.8 percent.

Gold stocks also turned in a strong performance amid an increase by the price of the precious metal, as reflected by the 1.7 percent gain posted by the S&P/TSX Global Gold Index.

Real estate, healthcare and consumer discretionary stocks also saw notable strength, moving higher along with most of the other major sectors.