(New York) The Toronto Stock Exchange on Friday ended a streak of five consecutive sessions of decline, supported by gains in the energy and mining sectors.
Updated yesterday at 5:05 p.m.
In New York, the major indices ended down, spooked by the announcement of the extension of the shutdown of the Nord Stream gas pipeline in Europe, which raised fears of an escalation of the energy crisis and a recession on the Old Continent.
The Dow Jones lost 1.1%, the NASDAQ index lost 1.3% and the broader S&P 500 index lost 1.1%. The NASDAQ chained a sixth session of decline in a row; such a sequence had not been observed for more than three years.
Divestment in previous sessions had begun following a speech by US Federal Reserve (Fed) Chairman Jerome Powell, in which he warned that interest rates would need to remain high for quite a while to reduce inflation.
All year, investors feared that overly aggressive central bankers would set interest rates high and plunge the economy into a full-blown recession. That fear seemed to dissipate somewhat this summer, leading to a six-week stock market rally in late July and early August, but Mr Powell’s speech immediately turned investor sentiment upside down.
In Canada, the S&P/TSX Composite Index was further weighed down by the drop in crude oil prices this week and the negative impact this had on energy stocks. On Friday, however, crude prices rallied, dragging oil and gas stocks with them and boosting the TSX.
Crude oil futures for October delivery rose 26 cents to US$86.87 a barrel on Friday on the New York Commodities Exchange.
“On the oil front, the Organization of the Petroleum Exporting Countries [OPEP] is meeting next week and some believe that production will be reduced. By reducing production, we will reduce supply,” explained Anish Chopra, managing director of the firm Portfolio Management.
“And energy stocks are responding to that potential today. »
Gazprom’s impact
“You can make a direct link between the Gazprom news” and the market downturn, pointed out Patrick O’Hare of Briefing.com. “It adds a factor of uncertainty. »
The group announced on Friday the extension of the shutdown of Nord Stream, which provides most of Europe’s supplies of Russian gas, citing the need to repair a faulty turbine.
The pipeline was originally scheduled to resume deliveries this Saturday, after three days of maintenance.
“Europe is already in a weakened economic situation, so the markets clearly see [dans cette nouvelle] an aggravating factor,” explained Bill Northey of US Bank Wealth Management.
Investors, however, showed some optimism at the start of the session, after the publication of the monthly US employment report, according to which 315,000 jobs were created in August, significantly less than the 526,000 new jobs in July.
Slight rise in US unemployment
Another sign of a slowdown, the unemployment rate rose slightly to 3.7%, against 3.5% the previous month.
“The unemployment rate went up because the job market couldn’t absorb all the people who [se remettaient à chercher un emploi] observed Jamie Cox of Harris Financial Group. “And the rise in wages eventually subsided. These are the best signals that a soft landing [de l’économie] is possible. »
“If the next CPI [indice des prix à la consommation] shows that inflation continues to decelerate at a more sustained pace, an increase of half a point [du taux directeur de la banque centrale américaine] could be preferred to a more offensive increase of 0.75 points ”, anticipated Quincy Krosby, of LPL Financial.
Operators thus now attribute a probability of 44% to an increase of half a point, against only 25% the day before.
Gazprom’s announcement, which pushed investors towards assets considered safer, combined with the possibility of a less brutal Federal Reserve, boosted the bond market. The yield on 10-year US government bonds, which moves inversely to their price, eased to 3.2% from 3.3% the day before.
As for equities too, “we succumbed to the feeling of caution that dominated the whole week,” noted Bill Northey.
In the currency market, the Canadian dollar traded at an average rate of 76.21 US cents, up from 75.95 US cents the previous day.
On the New York Commodities Exchange, the price of natural gas fell 48 US cents to US$8.79 per million BTU. Gold rose US$13.30 to US$1,722.60 an ounce, while copper rose 1 cent US to US$3.41 a pound.