Canadian and U.S. markets rise after data show labour markets continue to cool

TORONTO — Markets on both sides of the border ended the week on a sunny note after a pair of reports showed signs of cooling in the job market on both sides of the border, lending optimism to investors looking for certainty.

Broad-based strength led by battery metals and telecom stocks helped the TSX gain one per cent Friday despite weakness in energy stocks, while U.S. markets also rose.

The S&P/TSX composite index closed up 198.51 points at 19,824.85, even though the energy index was down 1.57 per cent.

In New York, the Dow Jones industrial average was up 222.24 points at 34,061.32. The S&P 500 index was up 40.56 points at 4,358.34, while the Nasdaq composite was up 184.09 points at 13,478.28, gaining 1.38 per cent.

“The Canadian economy added fewer than expected jobs in October, and so did the U.S.,” said Anish Chopra, managing director with Portfolio Management Corp.

“You’ve got less wage pressure in the economy, so fewer jobs, less wage pressure. That could translate into lower inflation numbers,” he said.

Canada’s unemployment rate rose to 5.7 per cent in October, while the economy added 18,000 jobs. The report marked the fourth increase in the jobless rate over the past six months, adding to the picture of a labour market that’s continuing to soften.

Meanwhile, the U.S. economy added 150,000 jobs, down from the gain of 297,000 in September. The unemployment rate rose to 3.9 per cent.

Treasury yields fell after the U.S. jobs report, taking pressure off of equities after the 10-year yield hit its highest level since 2007 last week.

The fresh data takes some pressure off central banks, which have been weighing whether more rate hikes will be necessary to tamp down inflation.

“It looks like we’re at the end of the rate hiking cycle,” said Chopra.

This means more certainty for investors as they look to the year ahead, he said.

“As an investor, you don’t have to wonder if rates are going to keep rising.”

While interest rate cuts are still a while off, “investors now are starting to weigh the fact that the next move by central banks could be a rate cut as opposed to another rate increase,” he said.

The data comes after the U.S. Federal Reserve on Wednesday decided to hold its key rate steady, echoing the most recent announcement from the Bank of Canada.

The Canadian dollar traded for 73.08 cents US compared with 72.58 cents US on Thursday.

The December crude contract was down US$1.95 at US$80.51 per barrel and the December natural gas contract was up four cents at US$3.52 per mmBTU.

The December gold contract was up US$5.70 at US$1,999.20 an ounce and the December copper contract was up one cent at US$3.68 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Nov. 3, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Rosa Saba, The Canadian Press