A Canadian flag waves in Toronto’s Bay Street financial district on Friday, August 5, 2022. (Photo: Nathan Denette / The Canadian Press)
Canada’s primary stock index climbed more than 180 points on Thursday, lifted by gains in the mining and banking sectors. The positive movement mirrored Wall Street’s upward trend, which was bolstered by strong tech earnings and easing geopolitical tensions.
The S&P/TSX composite index ended the day at 26,751.95, gaining 185.63 points. This rise comes despite recent volatility driven by falling gold and oil prices—two commodities central to many companies listed on the TSX.
“All this up-and-down action we’ve seen lately is mostly tied to commodities,” said Allan Small, senior investment adviser at iA Private Wealth Inc. “Lower prices in gold and oil are usually bad news for Canadian markets, since many TSX stocks are resource-heavy.”
However, Small noted that strength in the financial sector and momentum from U.S. tech stocks gave the market a much-needed push. A loosening of banking regulations in the U.S. could benefit both American and Canadian banks, adding some wind to their sails.
Meanwhile, American stock markets had a strong showing. The Dow Jones Industrial Average surged by 404.41 points to close at 43,386.84. The S&P 500 rose 48.86 points to 6,141.02, and the Nasdaq composite jumped 194.36 points to finish at 20,167.91.
Small pointed to the market’s upbeat mood, saying it was partly driven by the recent ceasefire between Israel and Iran, easing investor worries tied to global conflict.
He also credited the surge in U.S. markets to strong earnings from chip manufacturers. Micron Technology, a major player in the memory and data storage space, reported better-than-expected earnings and a bullish forecast for the next quarter. Despite these positive numbers, its stock dipped slightly by 1% after a volatile day of trading.
Another tech giant, Nvidia, continued its impressive run, adding 0.5% to its value. Nvidia has seen a staggering 61% growth since April, making it the most valuable company in the U.S. stock market, thanks to its leadership in artificial intelligence chips.
Looking ahead, Small believes the possibility of U.S. interest rate cuts could give the markets an additional lift. “The Fed seems more open to cutting rates in the near future,” he said. “If that happens, and we see progress on trade agreements, it could spark the next major market rally.”
In economic updates, the Canadian dollar strengthened, trading at 73.31 cents U.S., up from 72.80 cents the previous day.
Crude oil prices edged up, with August contracts settling at US$65.24 per barrel, up 32 cents. Small explained that earlier price spikes tied to Middle East tensions have now calmed down. “With the ‘war premium’ gone, oil is slipping again, which is a positive sign for inflation and the broader market.”
Gold prices also inched up, with August contracts rising US$4.90 to close at US$3,348.00 an ounce.
