North American stock markets end week on fire after surprising jobs reports

North American stock markets end week on fire after surprising jobs reports

North American stock markets end week on fire after surprising jobs reports

TORONTO — North American stock markets ended the week on fire following surprisingly positive jobs reports in Canada and the United States.

The S&P/TSX composite index hit a three-month high and closed up 326.20 points or 2.1 per cent at 15,854.07. It gained nearly 4.4 per cent for the week and is just 12 per cent off February’s record high, recorded before the sharp downturn as the COVID-19 pandemic took hold.

The U.S. markets were even stronger, with the Nasdaq composite index becoming the first of North America’s indexes to return to record-setting territory.

It ended the day at 9,814.08 points, up 198.27 points after hitting an intraday high of 9,845.69. The technology-heavy index last set a record high of 9,838.37 on Feb. 19.

While investors have in the past shrugged off horrendous economic data due to COVID-19, they took notice after the numbers shattered expectations, said Philip Petursson, chief investment strategist at Manulife Investment Management.

“Not only did it do better than what was thought but it was a job gain and that’s really what I think caught the market off guard,” he said in an interview.

U.S. employers added 2.5 million jobs in May, compared with an expected drop of more than eight million.

The job gains which were even higher in the private sector followed April’s plunge of 20.69 million. The unemployment rate fell to 13.3 per cent, a still sizable number.

In Canada, a surprising 289,600 jobs were added even though the unemployment rate reached a record high of 13.7 per cent.

While May’s job numbers could be revised downwards in revisions, their unexpected strength buoyed market sentiment about the economic recovery.

The big question for the market is whether there will be a recovery of corporate earnings, that he suspects is probably still longer off.

“I think investors, now given the level that we are at, may take a breather and may start to really look closer at the fundamentals of the market like valuation, in particular, and what the earnings outlook might look like for the next 18 months. And it wouldn’t surprise me at all if we saw a pause in this rally,” he said.

The TSX enjoyed a broad-based rally with 10 of the 11 major sectors rising — materials being the only laggard.

It fell as a rise in copper prices couldn’t offset the impact from a drop in gold prices.

The August gold contract was down US$44.40 at US$1,683.00 an ounce and the July copper contract was up 6.6 cents at US$2.55 a pound.

Energy was the big leader, soaring 7.9 per cent as crude oil prices climbed for a sixth consecutive week.

That sent the loonie higher. The Canadian dollar traded for 74.47 US compared with 74.03 cents US on Thursday.

The July crude contract was up US$2.14 or 5.7 per cent at US$39.55 per barrel and the July natural gas contract was down four cents at US$1.78 per mmBTU.

Crude prices ended 11.4 per cent higher for the week on the back of economic reopenings that spurred demand and the potential for OPEC and Russia to extend production cuts.

Shares of oil pipeline services provider Shawcor Ltd. soared 70 per cent, while energy producers Baytex Energy Corp. was up 25 per cent and Suncor Energy Inc. 10 per cent in heavy trading.

“The way you factor that into the oil producers is that every dollar the price per barrel goes up at this point goes right down to the bottom line. And so you have leverage in the oil producers over and above the oil gains themselves,” said Petursson.

The heavyweight financials sector gained 3.1 per cent with Manulife Financial Corp. up 5.6 per cent and the Toronto-Dominion Bank up 4.2 per cent.

Real estate was up 3.6 per cent, industrials 2.5 per cent and consumer discretionary nearly 2.8 per cent higher as Gildan Activewear Inc. up nearly 15 per cent.

The strong week has been driven by hope, positive jobs numbers and substantial monetary stimulus, said Petursson.

“It’s surprising given all these social unrest that’s going on in the United States right now that the market seems completely oblivious to it. But we would say the market is resting on an anti-depressant that’s been set up by the Federal Reserve.”

This report by The Canadian Press was first published June 5, 2020.

Companies in this story: (TSX:SCL, TSX:BTE, TSX:SU, TSX:MFC, TSX:GIL, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(Photo Courtesy of Red Deer Catholic Regional Schools)
Red Deer Catholic Regional Schools will not pilot draft curriculum

RDCRS is one of many divisions in the area to opt out of the pilot of the K-6 draft curriculum

Pay parking station on 50A Street in Sylvan Lake. (File Photo)
Resident Parking program returns to Sylvan Lake this weekend

The programs runs from May 15 to Sept. 15 every year

Supporters gather during a rally against measures taken by government and health authorities to curb the spread of COVID-19 at the Whistle Stop cafe in Mirror Alta, on Saturday May 8, 2021. The Whistle Stop was shut down by AHS for not complying with COVID-19 rules. THE CANADIAN PRESS/Jason Franson
Police hand out tickets to dozens leaving anti-lockdown protest in Alberta

Hundreds gathered outside the Whistle Stop Café in the hamlet of Mirror, Alta.

Alberta’s environment department has known for years that toxins from old coal mines are contaminating populations of the province’s official animal, the bighorn sheep. THE CANADIAN PRESS/Craig Bihrl
Alberta government knew bighorn sheep contaminated with coal mine selenium, scientist says

Jeff Kneteman says Alberta Environment has known about the problem in bighorn sheep for years

Prime Minister Justin Trudeau receives his COVID-19 AstraZeneca vaccination in Ottawa, Friday, April 23, 2021. THE CANADIAN PRESS/Adrian Wyld
75% of Canadians need 1st vaccine dose to have more normal summer: Trudeau

The country is on track to hit a major milestone on the road to COVID-19 herd immunity Tuesday, with 40% vaccinated with a 1st dose

A vial of the AstraZeneca COVID-19 vaccine.THE CANADIAN PRESS/Carlos Osorio
Alberta to stop giving first doses of AstraZeneca COVID-19 shot as supply dwindles

There aren’t any confirmed shipments of AstraZeneca coming, and the province only has 8,400 doses of it left

Winnipeg Jets’ Andrew Copp (9) and Edmonton Oilers goaltender Mike Smith (41) watch an incoming shot during second period NHL action in Winnipeg, Monday, April 26, 2021. THE CANADIAN PRESS/Fred Greenslade
‘Very jealous’: Canadian teams can’t take advantage of NHL’s relaxed COVID-19 rules

League eased some tight COVID-19 health and safety protocols over the weekend for fully vaccinated clubs

File photo
Arrest made for armed robbery in Millet, Wetaskiwin RCMP continue to investigate

Wetaskiwin RCMP are investigating an armed robbery took place May 4, 2021 in Millet, Alta.

Dr. Karina Pillay, former mayor of Slave Lake, Alta., is shown at her medical clinic in Calgary on Friday, April 16, 2021. THE CANADIAN PRESS/Jeff McIntosh
10 years later: Former Slave Lake mayor remembers wildfire that burned through town

Alberta announced in 2011 that an unknown arsonist had recklessly or deliberately ignited the forest fire

The body of Brenda Ware, 35, was found along Highway 93 in Kootenay National Park on Thursday, May 6, 2021. (RCMP handout)
RCMP ask for tips after woman travelling from Alberta found dead in B.C. park

Brenda Ware was found along Highway 93 in the park, 54 kilometres north of the town of Radium

A caribou grazes on Baffin Island in a 2008 file photo. A last-ditch attempt to save some of Canada’s vanishing caribou herds is a step closer after a scientific review panel’s approval of a plan to permanently pen some animals and breed them to repopulate other herds. THE CANADIAN PRESS/AP-Kike Calvo via AP Images
Parks Canada captive caribou breeding proposal gets OK from scientific review panel

Wolf density in Jasper is low enough that the animals would not be expected to be a major threat

Most Read