US markets also gain as job growth beats expectations, easing concerns over inflation and rate cuts
Canada’s main stock index gained nearly 200 points on Friday, led by strength in the energy, technology, and base metals sectors, as reported by BNN Bloomberg.
US markets also rose, spurred by a stronger-than-expected US employment report, which helped ease investor concerns.
Graham Priest, portfolio manager at BlueShore Financial, explained that the report revealed the US economy added 254,000 jobs last month, significantly higher than August’s figure and surpassing economists’ predictions.
According to Priest, the strong jobs report suggests that an economic soft landing remains a possibility, despite previous rate hikes by the US Federal Reserve aimed at controlling inflation. “Overall, with the surprise in the jobs number and unemployment ticking down, it’s had a big impact,” Priest noted.
Before this report, Wall Street had been on edge following weaker employment data, which led to concerns that the Fed might have delayed its interest rate cuts for too long.
Some traders had speculated that the Fed could implement another half-percentage-point rate cut this year, after beginning the easing cycle with such a move last month.
However, with the improved jobs numbers, the Fed is now expected to take a more gradual approach to rate reductions through 2025, Priest said.
The S&P/TSX composite index in Canada finished the day up 194.33 points, closing at 24,162.83. In the US, the Dow Jones industrial average climbed 341.16 points, reaching a new record high of 42,352.75.
The S&P 500 added 51.13 points, closing at 5,751.07, while the Nasdaq composite gained 219.38 points to end at 18,137.85.
On the currency front, the Canadian dollar traded at 73.65 cents US, down slightly from 73.86 cents US on Thursday.
Commodities also saw mixed movements. The November crude oil contract rose by 67 cents to close at US$74.38 per barrel, while the November natural gas contract fell by 12 cents to US$2.85 per mmBTU.
Gold prices dropped, with the December gold contract down by US$11.40, settling at US$2,667.80 an ounce. The December copper contract, however, increased by two cents to US$4.57 per pound.
The rise in oil prices was driven by escalating tensions in the Middle East, with Iran launching missiles into Israel, and Israel intensifying its military activities in Lebanon.
Priest suggested that oil prices could face continued upward pressure as the conflict develops, particularly due to concerns over how a potential Israeli retaliation might impact Iran’s crude exports and the global oil supply.
Priest also noted that while markets have shown strong performance recently, the ongoing uncertainty in the Middle East has prompted some investors to be more cautious.
He warned that should the conflict lead to disruptions in oil supply, rising prices could contribute to inflationary pressures, presenting additional risks for the economy.
