Canada’s main stock index ended higher on Friday as investors globally cheered recent signs of U.S. economic resilience and record high gold prices boosted metal mining shares, with the index notching its biggest weekly advance of the year.
The S&P/TSX composite index ended up 21.89 points, or 0.1%, at 23,054.61, its seventh straight day of gains. That’s the longest daily winning streak since April 2023.
For the week, the index was up 3.3%, its biggest weekly advance since October, putting it back in reach of the record closing high it posted last month.
“We’ve seen an incredible rebound in not just the Canadian equity market, but global equity markets,” said Douglas Porter, chief economist at BMO Capital Markets.
Global markets have recovered from a selloff last week as the latest U.S. inflation and retail sales data allayed recessionary fears and kept bets intact the Federal Reserve would begin cutting interest rates in September.
The materials group, which includes metal miners and fertilizer companies, was up 1.5% as the price of gold climbed more than 2% to notch an all-time high.
Shares of New Gold Inc ended 6.4% higher after National Bank of Canada raised its price target on the stock.
Financials, which account for 29% of the TSX’s weighting, added 0.6%, while energy was a drag, falling 1.1%, as the price of oil settled 1.9% lower at $76.65 a barrel on tempered expectations of demand growth from China.
Industrials also lost ground, pressured by declines for Canadian National Railway Co and Canadian Pacific Kansas City Ltd.
Both railroad companies have issued embargoes on certain shipments in advance to a potential strike from the Teamsters Canada Rail Conference Union that could begin as early as Aug. 22.
U.S. stocks ended higher on Friday, extending their biggest weekly percentage gains of the year as worries of an economic downturn eased and investors focused on the Jackson Hole Economic Symposium next week.
The S&P 500 and the Nasdaq notched their seventh straight session of gains, as stocks recouped losses from a tailspin two weeks ago. The sell-off, sparked by weak economic data and heightened recession fears, confirmed the Nasdaq had entered correction territory.
All three indexes recorded their biggest weekly percentage gains since late October, with the S&P 500 and the Nasdaq posting their first weekly gain in five.
“What were seeing in today’s markets is an extension of the comeback and the calming of earlier recession fears,” said Greg Bassuk, CEO of AXS Investments in New York.
“The positive economic data is really what’s fueling this rally, giving greater confidence to investors that are recession is likely to be avoided, and that the Fed will begin cutting rates in September.”
A barrage of high profile economic data this week, including the Labor Department’s consumer price index and a retail sales report from the Commerce Department, provided assurances that inflation continues meandering down toward the Federal Reserve’s 2% target, and that consumer spending is healthy.
Data on Friday showed U.S. single-family housing starts dropped to a near 1-1/2-year low in July, while the University of Michigan’s preliminary take on August consumer sentiment showed stronger-than-expected improvement.
Global central bank officials will speak at the symposium in Jackson Hole, Wyoming, next week, with Fed Chair Jerome Powell’s keynote speech on Friday potentially setting expectations for a U.S. rate cut trajectory.
“All eyes are going to be laser-focused on Powell’s comments next week,” Bassuk said. “Market activity this year has consistently been based on the likelihood and extent of Fed rate cuts.”
Chicago Fed chief Austan Goolsbee said in an interview with National Public Radio that central bank officials should be wary of maintaining restrictive policy longer than necessary.
Financial markets are betting on a 74.5% likelihood that the Fed will cut its key policy rate by 25 basis points as it ends its September policy meeting, with a diminishing 25.5% chance of a super-sized 50-basis-point cut, CME’s FedWatch tool showed.
The Dow Jones Industrial Average rose 96.7 points, or 0.24%, to 40,659.76. The S&P 500 gained 11.03 points, or 0.20%, at 5,554.25 and the Nasdaq Composite added 37.22 points, or 0.21%, at 17,631.72.
Among the 11 major sectors of the S&P 500, financials enjoyed the biggest percentage gain, while industrials suffered the largest drop.
Applied Materials slid 1.9%, reversing its surge after the chip-making equipment firm forecast stronger-than-expected fourth-quarter revenue.
Amcor posted a bigger-than-anticipated decline in fourth-quarter sales. The packaging company’s U.S.-listed shares dropped 3.7% in the wake of the report.
Advancing issues outnumbered decliners on the NYSE by a 2.22-to-1 ratio; on Nasdaq, a 1.53-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and no new lows; the Nasdaq Composite recorded 66 new highs and 85 new lows.
Volume on U.S. exchanges was 10.11 billion shares, compared with the 12.27 billion average for the full session over the last 20 trading days.
Reuters