Canada’s main stock index closed at a new record high on Friday, lifted by gains in gold shares and renewed bets on an interest rate cut by the country’s central bank following weaker-than-expected domestic GDP data.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 0.46% at 28,564.45 and hit a record high of 28,607.3 earlier in the day. The index rose 4.8% for the month, recording its fourth straight monthly gain.
Canada’s economy contracted more than expected in the second quarter, falling 1.6% on an annualized basis as exports significantly declined. Money markets increased their bets for a rate cut on September 17 to 48% after the GDP data was released, from a previous 40%.
Mining shares rose 2.4%, tracking higher gold prices that were poised for their best monthly performance since April. Gold mining stocks added 2.7%.
“Gold and silver stocks are keeping us afloat despite weak GDP numbers today,” said Alfred Lee, deputy chief investment officer at Toronto-based Q Wealth Partners. “Still plenty of data to come out before the next Bank of Canada meeting. Unemployment data next week (is) probably the data point that BoC will look at before deciding... basically a coin flip right now until then,” he added.
The Bank of Canada has kept rates steady at 2.75% at its last three meetings since March.
During the week, top Canadian lenders reported growth in quarterly profits and set aside lower-than-expected provisions for bad loans as trade tensions with the U.S. eased. Financials were up 0.2% for the week.
On Wall Street, the S&P 500 ended down from record highs on Friday, with losses in Dell, Nvidia and other AI-related stocks.
Nvidia dipped 3.4%, down for a third straight day. The AI heavyweight’s quarterly report on Wednesday fell short of investors’ high expectations but confirmed that spending related to artificial intelligence infrastructure remains strong.
“Today is just weakness in the top of the market, in tech,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. “This is not the first time that we’ve had some worries about over-investment in AI, lack of monetization opportunities and that type of thing.”
U.S. consumer spending increased by the most in four months in July while services inflation picked up, but economists did not believe the signs of strong domestic demand would prevent the Federal Reserve from cutting interest rates next month against a backdrop of softening labor market conditions. The report from the Commerce Department on Friday showed mild price pressures from tariffs on imports.
A U.S. tariff exemption for package imports valued under $800 also ended on Friday, raising costs for businesses and, in turn, consumers.
Traders widely expect the Fed will cut interest rates by 25 basis points at its September meeting.
“Even if we see an uptick in inflation, which it looks like we are, the Fed may look past that, given that this is going to be tariff-related and temporary,” said Jim Smigiel, chief investment officer at SEI.
Expectations of interest rate cuts helped lead the benchmark S&P 500 and the blue-chip Dow to their fourth straight month of gains, while the tech-heavy Nasdaq logged its fifth consecutive monthly rise. U.S. shares of Alibaba soared 13% and were among the most-traded on Wall Street after the Chinese company reported stronger-than-expected quarterly growth in its cloud computing business, driven by AI-related demand. As well, the Wall Street Journal reported that Alibaba has developed a new AI chip.
The S&P 500 declined 0.64% to end the session at 6,460.26 points a day after notching a record-high close.
The Nasdaq declined 1.15% to 21,455.55 points, while the Dow Jones Industrial Average declined 0.20% to 45,544.88 points.
Six of the 11 S&P 500 sector indexes rose, led by healthcare , up 0.73%, followed by a 0.64% gain in consumer staples . The S&P 500 technology index fell 1.63%.
The Russell 2000 index of smaller companies dipped 0.5%, and it logged a 7% gain in August.
For the month, the S&P 500 rose 1.9%, the Dow rose 3.2% and the Nasdaq added 1.6%.
Fed Governor Christopher Waller, a candidate for the central bank’s top job, said on Thursday he wants to start cutting rates next month, in line with President Donald Trump’s calls to lower borrowing costs.
A court hearing on Trump’s attempt to fire Federal Reserve Governor Lisa Cook ended on Friday with no immediate ruling from the judge hearing the unprecedented legal fight, meaning the U.S. central bank policymaker will remain in place for now.
Chipmaker Marvell slumped almost 19% after forecasting quarterly revenue below expectations.
Global economy bellwether Caterpillar dropped 3.65% a day after the heavy-equipment maker forecast higher tariff-related expenses for 2025.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.3-to-one ratio. The S&P 500 posted 21 new highs and no new lows; the Nasdaq recorded 76 new highs and 67 new lows. Volume on U.S. exchanges was relatively light, with 14.8 billion shares traded, compared to an average of 16.4 billion shares over the previous 20 sessions.
The U.S. and Canadian stock markets will be closed on Monday for the Labor Day holiday.
Reuters, Globe staff