Canadian and American markets moved higher on Friday, with the TSX posting a new all-time closing high, even though job reports in both countries showed different economic situations.
The S&P/TSX composite index closed up 212.59 points at 22,264.38.
In New York, the Dow Jones industrial average was up 307.06 points at 38,904.04. The S&P 500 index was up 57.13 points at 5,204.34 and the Nasdaq composite was up 199.44 points at 16,248.52, both gaining more than one per cent.
The U.S. job market continued to show unexpected strength, adding 303,000 employees to employers’ payrolls in March.
The market accepted the report as true, according to Brian Madden, chief investment officer with First Avenue Investment Counsel.
Recently, markets have tended to view strong economic reports negatively because they suggest that central banks might continue holding interest rates for longer rather than reducing them.
However, this time, markets viewed the positive news as good, said Madden.
“The markets are handling this well,” he said, as the expectation for company profits is more important than the possibility of fewer and delayed rate cuts.
This week, the markets have been uncertain as U.S. Federal Reserve officials made conflicting comments about whether the central bank would cut rates in 2024, and if so, when and how many.
It was a different situation in Canada on Friday, at least in terms of the data — “a tale of two cities,” said Madden.
Canada’s unemployment rate rose to 6.1 percent and the country lost 2,200 jobs, performing worse than expected.
“There’s no way to sugar-coat that,” said Madden. “That’s bad.”
Canada’s economy has not handled the interest-rate challenges nearly as well as the U.S. has, although neither country has started to cut interest rates.
Yet markets also appeared to view this report positively, with the TSX gaining almost one per cent on the day.
“The market ignoring it and rallying on high volume and broad-based participation is a positive sign,” said Madden.
If the economic data in Canada continues in this manner, he said, the Bank of Canada could follow through on what many expect and start cutting interest rates as early as June.
But Friday’s report won’t change its mind about its rate decision next week, he added. The central bank is widely expected to keep its key rate steady at five percent on Wednesday.
The Canadian dollar traded for 73.54 cents US compared with 74.05 cents US on Thursday.
The May crude oil contract was up 32 cents at US$86.91 per barrel and the May natural gas contract was up two cents at US$1.79 per mmBTU.
The June gold contract was up $36.90 at US$2345.40 an ounce and the May copper contract was down a penny at US$4.24 a pound.
— With files from The Associated Press
