(Toronto) The main Canadian stock index gained more than 150 points on Friday. South of the border, American markets reached records thanks to the announcement of good financial results for several major banks.
The S&P/TSX composite index rose 168.91 points to 24,471.17.
In New York, the Dow Jones industrial average rose 409.74 points to 42,863.86. The S&P 500 index rose 34.98 points to 5,815.03, while the NASDAQ Composite Index gained 60.89 points to 18,342.94.
In Canada, jobs data and a new consumer sentiment report gave analysts food for thought. But the biggest factor influencing markets on both sides of the border is U.S. bank profits, said Philip Petursson, chief investment strategist at IG Wealth Management.
A number of the nation’s largest banks reported better-than-expected third-quarter earnings on Friday, including JP Morgan Chase, whose stock rose 4.4% after it reported a more moderate profit decline. than analysts feared.
Banks traditionally kick off earnings season in the United States, so the encouraging numbers released Friday suggest results for other companies in other sectors could also be positive, Mr. Petursson said .
“Right now it’s all about earnings and 2025 forecasts in the United States, and I think that will carry over to Canada as well,” he said. Listening to companies’ forecasts for 2025 will set the tone for the market right now. »
Traders are closely watching company results because they want to see signs that the U.S. Federal Reserve (Fed) is on track to achieve a “soft landing,” the term for the sweet spot reached by companies. central banks when they seek to raise interest rates enough to control inflation, but without tipping the economy into recession.
Last month, the Fed lowered its benchmark rate from its highest level in 20 years, indicating that it is now broadening its focus to maintaining the health of the economy rather than just fighting the ‘inflation.
Many traders expect the Fed to cut the rate again by 25 basis points at its next meeting in November, which would relieve the pressure that high interest rates are putting on businesses and corporations.
Petursson said the Fed may choose not to cut the rate at all, given a report earlier this week that showed U.S. consumer inflation was not slowing as quickly as inflation. economists were waiting for it.
Drop more likely in Canada
The Bank of Canada is scheduled to make its next rate decision on October 23. Mr. Petursson said a decline is more likely here because the Canadian economy is not running at the same pace as that of the United States.
New monthly employment data from Statistics Canada on Friday was stronger than many economists expected, but the long-term trend in the Canadian labor market is still downward.
Additionally, the central bank’s consumer sentiment survey released Friday found Canadians were less pessimistic about their finances between July and September, but still not optimistic about the situation.
“So I think the Bank of Canada has a good reason to cut rates by 50 basis points,” Mr. Petursson said. This is the difference between the potential policy of the Bank of Canada and that of the Fed. »
The Canadian dollar traded at 72.67 US cents compared to 72.71 US cents on Thursday.
Mr. Petursson said downward pressure on the loonie would continue if the Bank of Canada’s monetary policy continues to follow a different path from that of the Fed.
Crude oil lost 29 US cents to US$75.56 per barrel and natural gas fell five US cents to US$2.63 per million BTU.
Gold was down US$37 at US$2,676.30 an ounce and copper was up six US cents at US$4.49 a pound.
With files from the Associated Press