TORONTO – The Toronto stock market entered what some consider bull market territory Friday, finishing the session more than 20 per cent above its January low, while the loonie soared nearly one cent following disappointing jobs numbers south of the border.
The S&P/TSX composite index gained 89.79 points to 14,226.78 as the global gold, materials, and metals and mining sectors outpacing the overall market. With its latest gain, the TSX now is 20.1 per cent above its Jan. 20 close of 11,843.11.
The Toronto stock market moved ahead on the strength of a big boost from precious metals miners following a key U.S. government report.
The Department of Labour released a report Friday morning showing the American economy added only 38,000 new jobs in May, the least in five years and well below most estimates.
“The world changed at 8:30 this morning … because of the jobs data,” said Allan Small, a senior adviser at Holliswealth. “That’s the bottom line.”
The report suggested an expected June interest rate increase by the U.S. Federal Reserve Board may now be off the table. The next potential rate hike could come in July, but some no longer consider that a possibility either, he said.
Following the report, the greenback faded against most major currencies. The loonie rose 0.95 of a U.S. cent to 77.26 cents US.
The Fed rate hike speculation and the decline of the U.S. dollar against many major currencies pushed up the price of gold, Small said.
“The only thing that’s working is gold,” he said.
“Right away, gold shoots up because gold is inversely related to the dollar.”
The August contract for gold bullion rose US$30.30 to US$1,242.90 a troy ounce.
South of the border, a slide in financial and consumer stocks led U.S. markets lower as investors weighed the implications of the Fed likely delaying an inrease in interest rates. Lower interest rates make it harder for banks to make money from loans.
The Dow Jones industrial average was down 31.50 points at 17,807.06, while the broader S&P 500 lost 6.13 points to 2,099.13 and the Nasdaq stepped back 28.84 points to 4,942.52.
Other reports out Friday also showed a mixed snapshot of the economy. The Institute of Supply Management said U.S. services firms grew in May at the slowest pace in more than two years, while the Commerce Department said orders to U.S. factories rose in April by the largest amount in six months.
Elsewhere in commodities, the July contract for benchmark North American oil fell 55 cents to US$48.62 a barrel, while July natural gas fell 0.7 cents at US$2.398 per mmBTU, and July copper added 4.3 cents to US$2.113 a pound.
— With files from The Associated Press
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