A Canadian flag waves in Toronto's Bay Street financial district, captured on Friday, August 5, 2022. (Photo by Nathan Denette/The Canadian Press)
Canada’s primary stock index saw modest growth on Thursday, powered by gains in energy and utilities sectors. The S&P/TSX composite index rose 38.86 points to close at 25,680.04. In contrast, U.S. markets dipped ahead of crucial jobs data due Friday, with the Dow Jones Industrial Average falling 248.33 points to 44,765.71. The S&P 500 and Nasdaq also posted slight declines, closing at 6,075.11 and 19,700.26, respectively.
Market Sentiment Ahead of Jobs Reports
Investors are gearing up for pivotal labour market updates from Canada and the U.S., as these reports could influence central bank decisions on interest rates. Kevin Headland, co-chief investment strategist at Manulife Investment Management, highlighted the importance of this data, particularly as the U.S. Federal Reserve weighs a potential quarter-percentage-point rate cut ahead of its December 18 decision.
In Canada, speculation is mounting that the Bank of Canada could implement a significant half-percentage-point rate cut next week. Headland believes the bank aims to mitigate the impact of looming mortgage renewals on household spending. “Unless tomorrow’s jobs report holds surprises, rate cuts seem likely,” he stated.
Mixed Canadian Bank Earnings
Canada’s banking sector delivered a mixed performance on Thursday. CIBC posted higher profits alongside reduced provisions for loan losses, while TD reported increased profits despite adjusted earnings reflecting ongoing challenges related to anti-money laundering measures. On the other hand, BMO’s results fell short of analyst expectations, though the bank anticipates improved loan performance by 2025. According to Headland, bank earnings have been in line with expectations.
Bitcoin Hits Historic Milestone
In a surprising turn, Bitcoin surged past the US$100,000 mark for the first time. The cryptocurrency’s rally follows news that U.S. President-elect Donald Trump has chosen crypto advocate Paul Atkins to lead the Securities and Exchange Commission. Headland noted the psychological significance of this milestone, adding that market volatility could impact Bitcoin’s ability to sustain this level.
Commodity Updates and Currency Movement
Canada’s dollar edged higher, trading at 71.24 cents US compared to 71.09 cents US the day before. In commodities, crude oil prices dipped slightly, with the January contract settling at US$68.30 per barrel, while natural gas prices rose to US$3.08 per mmBTU. Gold dropped by US$27.80 to close at US$2,648.40 an ounce, and copper prices also declined slightly.
