S&P/TSX composite posts small gain boosted by energy, while U.S. markets rally

TORONTO — Canada's main stock index made a small gain Friday, buoyed by strength in energy stocks, while U.S. markets rallied to end the week, led by a two-per-cent gain on the Nasdaq.

The TSX was relatively flat as tech gains pulled a heavier weight south of the border, though Shopify and Constellation Software helped lift the Canadian tech index higher, said Kevin Headland, chief investment strategist at Manulife Investment Management.

The S&P/TSX composite index closed up 67.06 points at 19,654.47.

Wall Street, meanwhile, rallied broadly to end what’s been otherwise a lukewarm week.

In New York, the Dow Jones industrial average was up 391.16 points, or 1.15 per cent, at 34,283.10. The S&P 500 index was up 67.89 points, or 1.56 per cent, at 4,415.24, while the Nasdaq composite was up 276.66 points at 13,798.11.

A report from the University of Michigan on Friday gave investors mixed signals, said Headland. The survey showed U.S. consumers’ expectations for inflation rose, while overall sentiment weakened by more than what economists were expecting.

As the expectation solidifies that the U.S. Federal Reserve intends to hold its key rate steady for the next while, markets are taking those signals as a positive, said Headland.

Investors will be keenly watching economic data releases over the next few months for confirmation that the economy is slowing at a steady pace, said Headland. Any surprises to the upside, or too much weakness, could signal that the soft landing markets have been hoping for might not materialize.

“This soft landing scenario is often very difficult to achieve,” he said.

Next week will bring a full slate of economic data in the U.S., said Headland, including inflation.

Meanwhile, third-quarter earnings continued to roll in on both sides of the border. Some companies have been mentioning softening customer demand in their results, noted Headland, and the effect of that will continue to be felt in the coming quarters.

“The recent earnings growth, both in the U.S. and Canada, for companies that have been beating, a lot of it tends to be on cost cutting,” he said.

Going forward, some companies will be increasingly challenged to maintain certain levels of profit, he said, “because once costs are cut, there’s very little more room to go.”

The Canadian dollar traded for 72.36 cents UScompared with 72.56 cents US on Thursday.

The December crude oil contract was up US$1.43 at US$77.17 per barrel and the December natural gas contract was down almost a penny at US$3.03 per mmBTU.

The December gold contract was down US$32.10 at US$1,937.70 an ounceand the December copper contract was down five cents at US$3.59 a pound.

This report by The Canadian Press was first published Nov. 10, 2023.

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

Rosa Saba, The Canadian Press