The Bay Street Financial District is shown with the Canadian flag in Toronto on Friday, August 5, 2022. THE CANADIAN PRESS/Nathan Denette
TORONTO – Canada’s main stock index gained almost a hundred points Thursday despite weakness in energy stocks, while U.S. markets erased a big chunk of their losses from the day before.
“It’s certainly a recovery from yesterday’s reaction to the Federal Reserve news, which was really that there wouldn’t be rate cuts coming in March,” said Anish Chopra, managing director with Portfolio Management Corp.
The S&P/TSX composite index closed up 97.33 points at 21,119.21.
In New York, the Dow Jones industrial average was up 369.54 points at 38,519.84. The S&P 500 index was up 60.54 points at 4,906.19,while the Nasdaq composite was up 197.63 points at 15,361.64.
The U.S. Federal Reserve on Wednesday held its overnight rate steady, and indicated that a start to rate cuts was unlikely to happen at the next central bank meeting.
“Rate cuts were still on the table, but they could come later in the year,” said Chopra.
“Investors were reassessing yesterday that they wouldn’t get as many rate cuts, and that those rate cuts, if they came, would actually come later in the year.”
On Thursday, markets recovered much of the selloff, helped in part by some fresh economic data, said Chopra.
A batch of reports, including the latest unemployment data and manufacturing report, suggested the American economy continues to be solid even as inflation pressures ease.
Investors were also waiting for several big name tech companies to report earnings after the bell, said Chopra: Apple, Amazon and Meta.
Friday will see U.S. jobs numbers for January released, noted Chopra.
“There’s been quite a bit of volatility between yesterday and today in terms of our stock market reaction, and part of it’s the Fed announcement,” he said. “But you get the macro data coming out tomorrow on the U.S. jobs picture and that should give investors some more data points to assess what’s happening in the U.S. economy.”
While the U.S. economy has remained resilient despite higher interest rates, Chopra said, Canada has been flirting with a technical recession even though inflation remains sticky.
“The probability of Canada decreasing its rates sooner than the United States is pretty high,” he said.
The Canadian dollar traded for 74.60 cents UScompared with 74.64 cents US on Wednesday.
The March crude contract was down US$2.03 at US$73.82 per barreland the March natural gas contract was down five cents at US$2.05 per mmBTU.
The April gold contract was up US$3.70 at US$2,071.10 an ounce and the March copper contract was down five cents at US$3.85 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Feb. 1, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
