TORONTO — Canada’s main stock index soared nearly 1.9% as commodity prices rose, U.S. markets gained and reported job losses in August, suggesting rate hikes interest rates from the Bank of Canada are helping to slow an overheated economy.
The jobless rate soared to 5.4% in August, rising for the first time in seven months as the Canadian economy shed 40,000 jobs, Statistics Canada reported Friday.
The rise in the jobless rate from a decades-long low of 4.9% in July could help moderate rate hikes going forward, said Anish Chopra, chief executive of Portfolio Management Corp.
“You’re starting to see the job losses, and that’s because of the Bank of Canada raising rates. And now the Bank of Canada needs to be more balanced in its approach. They’re going to raise rates again , but they may be slower as they increase rates.”
Potential easing from rate hikes helped push the S&P/TSX Composite Index up 360.34 points to close at 19,773.34 in a broad rally.
Growth stocks, including in the information technology and health care sectors, led the way to gains, advancing 3.3% and 4.2% respectively.
Shopify Inc. rose 8.2% daily after announcing a leadership change, while it was also likely boosted by a flurry of enthusiasm for growth-oriented stocks like tech in the U.S. saw Microsoft increase 2.3% and Amazon climb 2.6%.
Energy stocks continued their rebound along with fossil fuel prices, with the October crude contract closing at US$3.25 at US$86.79 a barrel and the October natural gas contract rising eight cents at US$8.00 per mmBTU.
Overall, the S&P/TSX Energy Index rose 2.65%, including 3.4% gains from Canadian Natural Resources Ltd. and 3.3% of Cenovus Energy Inc.
The base metals index gained 3.7%, with the December copper contract up 4 cents at US$3.57 a pound, while the December gold contract was up 8, US$40 to US$1,728.60 per ounce.
U.S. markets were also up as investor sentiment around an economic slowdown and rate hikes deviates from the pessimistic outlook of recent weeks, Chopra said.
“You have signs of an economic slowdown in Europe, as well as China. There are signs that higher interest rates and tighter monetary policy are starting to have an effect in the United States,” he said. -he declares.
“So what you have in the United States is somewhat similar to Canada, with the economy down, investors tend to come back to investing in growth stocks, and that’s where you have companies like Apple, Alphabet, Amazon and Tesla in place today.”
The Dow Jones industrial average rose 377.19 points to 32,151.71. The S&P 500 index rose 61.18 points to 4,067.36, while the Nasdaq composite rose 250.18 points to 12,112.31.
The Canadian dollar was trading at 76.72 cents US versus 76.24 cents US on Thursday.
This report from The Canadian Press was first published on September 9, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press