By James Langton

(March 21 – 17:00 ET) – Traders spent the past day and a half waiting for the U.S. Federal Reserve Board to hike rates. Once it did, traders released their pent-up energy in an orgy of buying.

The TSE 300 closed up 83 points to 9,651, after opening the day down. Volume, which was sluggish this morning, surged this afternoon to 162 million shares. The down volume outweighed the up 16:13 and decliners outpaced advancers 26:21.

The Fed’s 25 basis point rate hike was accompanied by a statement that indicated the Fed still forsees low inflation, but it’s raising rates to keep the lid on. Traders liked the tone of that view and bid markets up across the board. Simple relief and some short-covering also played a part.

The Dow which was up much of the day anyway rallied hard toward the close, finishing up 227 points to 10,907. The Nasdaq opened deeply lower, fought back before the Fed, and rallied strongly after the announcement. Nasdaq closed up 100 points to 4,710. The S&P added 37 points to 1,494.

Five of the TSE’s 14 groups finished on the downside. Biotechs led the way down after patent questions resurfaced. Angiotech Pharmaceuticals and other Canadian firms were caught in the downdraft. Firms such as Research in Motion, Delrina, and Sierra Wireless slid. Corel fell more than 21% as the market digested the latest round of disappointments at the firm.

On the upside, gold led the way, up 3%, in the wake of a lacklustre gold auction by the Bank of England. Utilities, media stocks and pipelines were also up rather convincingly. The Nasdaq turnaround led to strong bounce-backs in recent whipping boys such as 724 Solutions and JDS Uniphase. Cognos continued up, as did BCE Emergis and the odd old school stock such as Potash Corp.

Bombardier closed up almost 5% in heavy trading after announcing a large new supply contract. Nortel Networks latest acquisition was greeted with skepticism initially, but that turned around after the Fed call. It finished up 2%. BCE added 2% of its own. Canadian 88 closed up 13% in heavy trading. CIBC added more than 3%.

The CDNX was the only market that didn’t get it turned around in the face of the Fed this afternoon. It closed down 67 points to 4,405. Volume was light on the day at 74.8 million shares. Technology led the weakness, joined by oils and miners. Entreplex Tech was the hottest trader, up 1,750% to $3.70 on volume of 1.7 million shares.

Canadian traders are all expecting the Bank of Canada to follow the Fed with its own rate hike tomorrow. Although there is slightly less certainty here than there was in the U.S., some are playing the slim chance the Bank stands pat. Stay tuned.