1 week ago
TSX slips as strong U.S. jobs data boosts rate-hike bets
Canada's main stock market ended lower on Friday.
Mining and oil companies were among the biggest decliners.
U.S. employers added jobs faster than expected in August.
This made investors think the Federal Reserve may raise interest rates later this month.
The estimated chance of a rate hike rose from 55% to about 65%.
Canada's economy, however, lost 41,700 jobs during the same month.
The Bank of Canada kept its interest rate unchanged but said it could raise rates if inflation stayed too high.
Overall, the Canadian stock market fell slightly during the week.
The S&P/TSX Composite Index fell 0.33% to 36,513.80 on Friday.
Materials and energy stocks declined as gold, silver and oil prices fell.
Stronger-than-expected U.S. job growth lifted the implied chance of a Federal Reserve rate hike to about 65%.
Canada lost 41,700 jobs in August after unusually strong summer hiring.
The TSX declined 0.1% for the week, amid uncertainty from Middle East strikes, oil prices and bond yields.
- Who
- Canadian stock investors, the Federal Reserve, the Bank of Canada and companies in the materials and energy sectors.
- What
- The S&P/TSX Composite Index fell 0.33% after U.S. jobs data increased expectations of a Federal Reserve rate hike.
- Where
- Canada's Toronto Stock Exchange market, influenced by economic data from the United States.
- When
- Friday, September 4; the TSX fell 0.1% over the week.
- Why
- Stronger U.S. employment data encouraged rate-hike bets, while weaker materials and energy stocks pressured the Canadian index.
Rate-hike expectations
Rate-hike caution
Economic signals
Rate-hike expectations
Accelerating U.S. job growth and a steady 4.1% unemployment rate suggested that the U.S. economy remained strong, encouraging traders to raise the implied probability of a Federal Reserve rate hike.
Rate-hike caution
Canada lost 41,700 jobs in August, signaling weaker domestic employment and providing a less supportive backdrop for Canadian markets.
Central-bank outlook
Rate-hike expectations
Bank of Canada Governor Tiff Macklem said policymakers were prepared to raise rates multiple times if inflation remained too high.
Rate-hike caution
The Bank of Canada held rates steady, indicating that policymakers had not yet made another increase.
Key facts
- TSX close
- The S&P/TSX Composite Index fell 0.33% to 36,513.80.
- Weekly performance
- The TSX declined 0.1% for the week.
- U.S. unemployment
- The U.S. unemployment rate held steady at 4.1% in August.
- Rate-hike probability
- Short-term futures implied about a 65% chance of a Federal Reserve hike later in September, up from 55% before the jobs report.
- Canadian employment
- Canada lost 41,700 jobs in August.
- Sector declines
- Materials fell 1.2%, while energy stocks dropped about 1%.
- Bank of Canada
- The central bank held interest rates steady but said it could hike multiple times if inflation remained too high.
Quotes
Mike Archibald
Portfolio manager at AGF Investments
“It just reaffirms this idea that the U.S. economy, despite some concerns, is still in a very good position. It will be very important in the next couple of weeks to see what happens with the data and how that evolves with respect to the expectations for market participants.”
livemint.com
Sources
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