Canada’s main stock index edged higher on Thursday, lifted by the materials sector as gold prices jumped after a disappointing U.S. jobs report tempered expectations for interest rate hikes.
The Toronto Stock Exchange’s S&P/TSX Composite Index was up 65.65 points, or 0.19 per cent, at 34,922.64 at 10:48 a.m. ET, following a market holiday on Wednesday.
TSX Composite Index
U.S. job growth slowed more than expected in June and payroll gains for the prior two months were revised lower, pointing to a cooling labor market and prompting financial markets to scaleback expectations for a near-term interest rate hike from the Federal Reserve.
Traders priced in a much slimmer chance of a rate hike from the Fed this month, but continued to see monetary policy tightening in September as likely.
“It is showing some signs of weakness in the U.S. labor market, but nothing too alarming right now,” said Michael Dehal, senior portfolio manager at Dehal Investment Partners at Raymond James.
“I think the focus is still on price stability and the Fed,” Dehal said.
Spot gold and silver were up 2.3 per cent and 3.7 per cent, respectively, as the dollar came under pressure after the jobs report. The S&P/TSX Global Gold index rose 2.5 per cent and the materials index added 1.7 per cent.
Iran and the United States concluded a round of indirect talks in Doha on Wednesday without any clear breakthrough toward a lasting peace agreement. Oil prices still slid as supply concerns around the Strait of Hormuz eased.
Meanwhile, the U.S. denied an extension of the U.S.-Mexico-Canada Agreement for 16 years without changes. The decision keeps the agreement in place for another 10 years with annual reviews before it expires, unless the three countries agree to renew it with changes.
“That was largely expected. But going forward, investors will be looking at any signs of renegotiations,” said Dehal.
U.S. stocks are rising Thursday after the latest update on the job market suggested the Federal Reserve may feel less pressure to hike interest rates .
The S&P 500 climbed 0.7 per cent and is on track to close out its best week in two months ahead of Friday’s holiday for Wall Street. The Dow Jones Industrial Average was up 454 points, or 0.9 per cent,and the Nasdaq composite was 0.7 per cent higher.
Stocks got some help from easing Treasury yields in the bond market , which fell after a report from the U.S. government said employers added 57,000 jobs to their payrolls last month. That’s growth, which is good for the economy, but it was also short of the 100,000 jobs that economists expected and a slowdown from May’s hiring pace.
The weaker-than-expected result could keep pressure off inflation , which has been accelerating worldwide because of jumps in oil prices caused by the war with Iran . And if inflation slows in upcoming months, now that oil prices are back below where they were before the war, the Federal Reserve may feel less need to raise interest rates several times this year.
That would be a relief for investors, who tend to love lower interest rates because they can give the economy a boost by making it cheaper for U.S. households and businesses to borrow money and spend. Lower rates also tend to push upward on prices for stocks and other investments.
The yield on the 10-year Treasury got to 4.50 per cent in the morning, up from 3.97 per cent just before the war. But after the release of the U.S. hiring data, it immediately fell back to 4.47 per cent.
The two-year Treasury yield, which more closely tracks expectations for the Fed, fell more sharply. Traders now see an 80 per cent chance that the Fed and its new chairman, Kevin Warsh, will not raise the federal funds rate at its next meeting later this month. That’s up from the 71 per cent chance seen a day earlier, according to data from CME Group.
“The labor market isn’t overheating,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. He said the data could allow the Fed to wait through the summer to get more clues about how inflation is behaving before having to decide on hiking rates.
Also helping Wall Street was a steadying for some stocks of computer chip companies. They’ve been under pressure on worries that their stock prices shot too high in the frenzy around artificial- intelligence technology and that all the spending on chips and data centers may not result in as much profit and productivity growth as hoped.
Memory maker Micron Technology’s stock rose 1.4 per cent and recovered some of its 10.6 per cent drop from the day before. But Applied Materials fell 2.8 per cent, while Advanced Micro Devices swung between gains and losses.
Elsewhere on Wall Street, the company behind LaCroix sparkling waters climbed 10 per cent after National Beverage said it will pay a special dividend of US$3.25 for each share that investors hold.
It was a widespread rally for U.S. stocks, with three out of every four stocks rising within the S&P 500. Some of the biggest gains were for companies in the cryptocurrency industry, as the price for bitcoin climbed 4 per cent toward US$62,000. A day earlier, it dropped near its lowest level since 2024.
Robinhood Markets rose 10.4 per cent, Coinbase Global gained 8.5 per cent and Strategy rallied 11.4 per cent.
In the oil market, prices continued to sink on hopes for negotiations for a permanent end to the war with Iran. Brent crude, the international standard, fell 1 per cent to US$70.82 per barrel.
In stock markets abroad, indexes fell sharply in several Asian markets. South Korea’s Kospi index dropped 7.9 per cent due to big losses for chip companies like SK Hynix. That’s its worst drop since a 10 per cent plunge a little more than a week ago.
Indexes also fell 2.5 per cent in Tokyo and 2 per cent in Shanghai.
European indexes were stronger, and France’s CAC 40 rallied 1.9 per cent.
Reuters and The Associated Press
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