Canada’s main stock index rose on Thursday as U.S. jobs data lowered expectations for Federal Reserve interest rate hikes, with gains for metal mining shares offsetting declines for financials and auto parts suppliers.
The Toronto Stock Exchange’s S&P/TSX Composite Index ended up 109.68 points, or 0.3 per cent, at 34,966.67 on the first day of trading for the third quarter. The market was closed on Wednesday for Canada Day.
U.S. job growth slowed sharply in June and payroll gains for the prior two months were revised lower, pointing to a cooling labor market.
“The weaker labor data has helped ease concerns around potential U.S. interest rate hikes,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The price of gold increased 2.2 per cent as the U.S. dollar lost ground against a basket of major currencies. The materials group, which includes metal mining shares, was up 2.5 per cent.
Energy added 0.5 per cent as the price of U.S. oil settled 0.2 per cent higher at US$68.69 a barrel.
British Columbia announced a deal with Canada’s federal government that maintains the federal ban on oil tankers along the province’s north coast, but appears to open the door to neighboring Alberta’s proposal for a new crude oil pipeline if a different route is proposed.
Consumer discretionary ended 0.7 per cent lower, with shares of autoparts supplier Magna International down 4.8 per cent.
The Trump administration on Wednesday declined to extend the U.S.-Mexico-Canada Agreement, starting a decade-long clock to wind down the trade deal as it seeks changes to try to reshore manufacturing jobs and reduce U.S. trade deficits with its North American neighbors.
Heavily weighted financials lost 0.5 per cent, giving back some recent gains. The sector was up nearly 25 per cent in the second quarter.
Domestic data showed that the manufacturing sector expanded further in June as production and employment rose, but intensifying supply shortages helped lift cost inflation to a near four-year high.
The Dow rose more than 1 per cent on Thursday, posting a record closing high and a fourth straight week of gains ahead of the long holiday weekend, as a softer-than-expected U.S. jobs report eased worries about interest rate hikes.
The Nasdaq ended lower with chipmakers, while the S&P 500 was flat, although both indexes also registered gains for the week.
The U.S. market will be closed on Friday in observance of the U.S. Independence Day holiday.
The Dow’s weekly streak of gains was its longest since October 2024.
The U.S. nonfarm payrolls report showed the economy added 57,000 jobs last month, far below economists’ estimates for a rise of 110,000. The unemployment rate was 4.2 per cent, in line with expectations of 4.3 per cent.
The employment report followed a run of strong job gains recently. Expectations for a rate hike from the Fed decreased after the report, according to CME FedWatch.
For the September meeting, hike expectations dimmed to 55 per cent from 64.1 per cent.
The jobs report “doesn’t mean the fear of inflation is over,” said Adam Sarhan, chief executive at 50 Park Investments in New York. “It just takes the pressure off the Fed to raise rates in the short term.”
Investors have been worried about inflation especially given sharp gains in oil prices at the start of the Iran war.
Apple shares rose 4.8 per cent and helped to support all three major indexes. Nikkei Asia reported that Apple plans to launch five new iPhone models.
The Dow Jones Industrial Average rose 594.83 points, or 1.14 per cent, to 52,900.07, the S&P 500 gained 0.01 points to 7,483.24 and the Nasdaq Composite lost 207.36 points, or 0.80 per cent, to 25,832.67.
For the week, the Dow rose about 2 per cent, the S&P 500 gained 1.8 per cent and the Nasdaq advanced 2.1 per cent.
An index of semiconductors ended 5.4 per cent lower on Thursday, falling sharply for a second day.
Investors are likely taking profits in chip stocks following this year’s strong gains, said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts.
The semiconductor index remains up about 78 per cent for the year to date.
Tesla shares dropped 7.5 per cent even though the electric carmaker posted second-quarter deliveries above estimates. Tesla shares had risen sharply this week ahead of the report.
Among other decliners in stocks, Bending Spoons dropped 11.3 per cent, a day after the Vimeo owner gained 40 per cent in its debut on the Nasdaq.
Reuters and The Associated Press