(RTTNews) – Extending the gains from two previous sessions, Canadian stocks edged higher on Friday after yesterday’s U.S. nonfarm payrolls data cooled U.S. Federal Reserve rate hike concerns, leading to a rise in gold-linked metal stocks and a consequent surge in materials sector that lifted the index.
After opening higher than yesterday’s close, today the benchmark S&P/TSX Composite Index traded positive throughout the session before settling at 35,274.84, up by 308.17 points (or 0.88%).
Ten of the 11 sectors posted gains today, with the materials sector leading the pack.
The Memorandum of Understanding signed between the U.S. and Iran on June 17 paved way for a 60-day ceasefire and the immediate reopening of the Strait of Hormuz.
Representatives from both nations concluded their initial round of talks, and the next round is scheduled to be held after the burial of Iran’s late Supreme Leader Ayatollah Ali Khamenei on July 9.
Shipping traffic through the Strait of Hormuz is picking up gradually.
The U.S. and Iran exchanged strikes over the weekend due to two separate incidents involving projectile hits on two ships transiting across the strait. Later, the two nations reconciled and halted the attacks.
Optimism increased among market participants after the Wall Street Journal reported that U.S. President Donald Trump has decided to give diplomacy a full chance before resuming aggressive measures.
In an interview with CNBC, Trump claimed that Iran has accepted ‘just about everything’ the U.S. demanded in the ongoing indirect negotiations.
U.S. markets remain closed today in observance of the Independence Day Holiday as July 4 falls on a Saturday this year. Hence, the U.S. nonfarm payrolls data was released yesterday, which revealed that the economy added 57,000 jobs in June, far below a downwardly revised 129,000 in May and forecasts of 110,000.
As the payrolls data turned out to be softer-than-expected, investors have lowered their rate hike bets which offered a support to gold prices.
Currently, investors are betting on a 21.90% chance of a quarter-basis-point interest rate hike in the upcoming meeting of the U.S. Federal Reserve on July 28-29 while the bets on rates being held at the current 3.50% to 3.75% range stand at 78.10%, according to the CME Group’s FedWatch Tool.
A surge in materials sector due to gold-linked metal stocks pushed the index higher today.
Canadian business houses and investors are awaiting Canadian government’s response to the U.S. administration’s refusal to renew the high-stakes Canada-United States-Mexico Agreement for free trade. Canada and Mexico were pushing for renewing the deal.
On July 1, citing certain shortcomings and trade deficits as reasons, the U.S declined the renewal of the trilateral pact for a new 16-year term.
In an interview with Global News yesterday, U.S. Trade Representative Jamieson Greer stated that the U.S. is concerned that China could start to use Canada as a backdoor to enter into the U.S. markets. After years of detached relations, Canadian administration started forging ties with China in order to diversify its markets and lower the reliance on the U.S.
Economists are of the view that the U.S. is opting to negotiate bilaterally with Canada and Mexico separately. Formal U.S.-Canada negotiations are yet to begin.
Though CUSMA still remains in force now, it mandates a process of annual reviews until 2036 when it is set to expire.
The deal negotiated by Trump himself during his first term allowed Canadian businesses to bypass the high tariffs imposed by Trump last year on Canadian exports to the U.S.
On the economic front, it was an uneventful day for Canada with no significant data releases.
Major sectors that gained in today’s trading were Materials (2.44%), Healthcare (1.29%), Industrials (0.90%), IT (0.79%), Consumer Discretionary (0.76%), and Energy (0.62%).
Real Estate, Utilities, Financials, and Communication Services were the other sectors that made gains anywhere from 0.10% to 0.60%.
Among the individual stocks, Southern Cross Gold Consolidated Ltd (9.56%), Discovery Silver Corp (9.09%), Wesdome Gold Mines Ltd (8.11%), 5N Plus Inc (6.57%), Sienna Senior Living Inc (2.29%), and Gfl Environmental Inc (7.60%) were the prominent gainers.
Consumer Staples (0.10%) was the only one major sector that lost in today’s trading.
Among the individual stocks, Empire Company Ltd (1.40%), Western George (0.99%), Metro Inc (0.81%), Loblaw CO (0.67%), and The North West Company Inc (0.12%) were the notable losers.
