TORONTO — Canada’s main stock index rose 1.58 per cent Friday on broad-based gains while U.S. markets were all up by more than two per cent.
The S&P/TSX composite index was up 307.67 points at 19,814.51.
In New York, the Dow Jones industrial average was up 700.53 points, or 2.13 per cent, at 33,630.61. The S&P 500 index was up 86.98 points, or 2.28 per cent, at 3,895.08,while the Nasdaq composite was up 264.05 points, or 2.56 per cent, at 10,569.29.
“We are seeing a bit of a relief rally,” said Angelo Kourkafas, an investment strategist at Edward Jones, after the trading year got off to a less-than-stellar start earlier in the week.
Kourkafas said new employment data on both sides of the border, while still elevated, gave investors some hope.
Canada added a surprise 104,000 jobs in December and the unemployment rate decreased to five per cent, while unemployment also went down in the U.S.
Though at first glance the employment data out of Canada and the U.S. was nothing for investors to celebrate given concerns about what the labour market means for inflation and interest rates, a closer look at the numbers shows that even as unemployment continues to be high, wage growth slowed somewhat, sparking optimism that a wage-price spiral might be avoided, said Kourkafas.
Further rate hikes were already a certainty in the U.S. and Friday’s data cemented the likelihood of a rate hike in Canada in January, he said, but investors seemed to take the numbers as a win-win for the month and perhaps even a sign that a recession isn’t quite as imminent as some thought.
“We still think the path for the so-called soft landing is a narrow one, but it’s still a possibility,” Kourkafas said.
There are also signs globally that inflation is cooling, such as in Europe, said Kourkafas.
U.S. inflation data next week could help reinforce investor optimism, he said, though central banks’ work is not yet done.
“They cannot declare victory, and today’s data highlights that,” he said. “We expect more of this hawkish tone and commentary to come out from banks.”
The Canadian dollar traded for 74.15 cents US compared with 73.72 cents US on Thursday.
The February crude contract was up 10 cents at US$73.77 per barreland the February natural gas contract was down a penny at US$3.71 per mmBTU.
The February gold contract was up US$29.10 at US$1,869.70 an ounce and the March copper contract was up nine cents at US$3.91 a pound.
This report by The Canadian Press was first published Jan. 6, 2023.
Companies in this story: (TSX:GSPTSE, TSX_CADUSD=X)
