(Toronto) Canada’s main stock index closed higher on Thursday, helped by strength in the telecommunications, utilities and energy sectors.
The S&P/TSX composite index rose 20.35 points to 22,244.02.
The advance came as U.S. stock markets were closed for the July 4 holiday.
It’s a slow trading day in Canada due to the U.S. holiday.
Anish Chopra, Managing Director of Portfolio Management
Investors were already looking ahead to Friday, which will bring new employment data from the United States and Canada, Chopra said. Those data could have implications for interest rate cuts in both countries.
Economists expect the U.S. economy to have added about 190,000 jobs in June, down from May, Chopra said.
“The U.S. economy has been quite strong despite high rates […] over the past two years, he said. Economists still expect reasonable growth in payrolls.”
The report will add to the pile of data the U.S. Federal Reserve will rely on to determine when to start cutting its key interest rate. Currently, markets are seeing September as a real possibility, Chopra said.
The central bank is still looking for further evidence that inflation is moving sustainably toward its 2% target, he added.
“They will need real, hard economic evidence. […] before they cut rates in the United States, demonstrating that inflation is under control, because the risk in the United States is that inflation starts to rise again. And that’s not something they want to see,” Chopra said.
The Fed won’t want to see any big surprises in the jobs report, he said.
At the start of the year, markets were anticipating up to six rate cuts from the Fed in 2024, but those expectations have been gradually reduced as the economy has shown resilience.
Meanwhile, in Canada, signs of a slowing economy are mounting, which is why the Bank of Canada recently announced its first interest rate cut in years, Chopra said. Friday’s jobs report should add fuel to the fire.
The central bank could cut its benchmark rate a second time this month, but if the jobs report is better than expected, officials could hold off, Chopra said.
“Investors, as well as the Bank of Canada, will be looking for confirmation that the economy is continuing to slow and that gives the Bank of Canada some evidence, some ammunition or some support for continuing to cut interest rates,” he said.
On the currency market, the Canadian dollar was trading at 73.46 US cents, compared to 73.33 US cents on Wednesday.
Commodity markets were also closed to regular trading.