TSX unchanged as markets await Scotland referendum results

Scots were voting to decide if they want to leave the United Kingdom. Referendum results were expected early Friday in a vote that polls indicated was too close to call.

Observers say if Scotland stays as part of the U.K. it would remove a lot of the uncertainty that has developed on equity markets and has helped drive up the value of the U.S. dollar. Some traders have suggested a vote to leave could put a damper on the global economic recovery.

“There would be an effect. If they vote Yes, there would be an effect that is not currently factored into markets,” said Paul Taylor, chief investment officer of asset allocation at BMO Asset Management.

He said that a Yes vote would raise questions in a number of jurisdictions and about whether Scotland would be admitted into the European Union.

On Wall Street, markets rallied with the Dow Jones industrials ahead 109.14 points at 17,265.99, closing at an all-time high. The S&P 500 index advanced 9.79 points to 2,011.36, also a record high, while the Nasdaq was up 31.24 points at 4,593.43.

The U.S. markets got a boost after the U.S. Federal Reserve signalled Wednesday that it still plans on keeping its key interest rate at a record low “for a considerable time” if inflation remains under control.

“The key is that it looks like the Fed is going to take a pragmatic, data-driven approach to the gradual unwinding of its extraordinary easy monetary conditions,” said Taylor.

“The markets takes great comfort from that. They’re on story and there’s a sense the Fed isn’t going to be what will cause this party to come to an end.”

The U.S. Labor Department reported that fewer Americans filed first-time claims for unemployment benefits last week. Weekly applications fell 36,000 to 280,000, well below economists’ forecasts. The four-week average, a less-volatile measure, also dropped.

Air Canada (TSX:AC.B) said it will begin to charge a $25 fee for a first checked bags on domestic flights. The fee applies to passengers booking the lowest economy class Tango fares as of Thursday for flights beginning Nov. 2. Shares in Air Canada rose 39 cents to $9.01.

Meanwhile, Penn West Petroleum Ltd. is reclassifying some $80 million of its capital budget this year as operating expenses after a review of accounting irregularities that found hundreds of millions in past expenses had been incorrectly categorized. The oil and gas producer (TSX:PWT) said the change means the company’s 2014 capital budget will be $820 million instead of $900 million, however it noted the change will not affect its development plans.

The company restated its financial reports for 2012, 2013 and the first quarter of 2014 after its new chief financial officer found inadequate documentation last spring to support how some of its operating expenses were classified in the past. Shares in Penn West fell 60 cents to $8.33.

On the commodity markets, December gold bullion was down $9 to US$1,226.90 an ounce. Gold stocks were the heaviest weight on the TSX, with the sector down 1.9 per cent. The October crude contract on the New York Mercantile Exchange was down $1.35 to US$93.07 a barrel, while December copper lost five cents to US$3.09 a pound.