S&P/TSX composite up to regain most of Thursday's losses, U.S. markets also rise

TORONTO — A broad-based rally helped Canada's main stock index close up more than 100 points Friday to largely recover from losses a day earlier, while U.S. stock markets also climbed.

The S&P/TSX composite index ended up 120.08 points at 22,320.87 to claw back much of the 146-point loss Thursday, though it was still down about the same amount from where it was a week earlier.

In New York, the Dow Jones industrial average was up 4.33 points at 39,069.59. The S&P 500 index was up 36.88 points at 5,304.72, while the Nasdaq composite was up 184.76 points at 16,920.79.

Markets rose to head into the U.S. long weekend as consumer outlook on inflation improved, said Kathrin Forrest, equity investment specialist at Capital Group.

"We saw moderating consumer inflation expectations reflected in the most recent University of Michigan survey," she said.

"So that was a bit of a sigh of relief after the Fed minutes that we saw earlier in the week, which had indicated some concerns over potentially more sticky inflation and higher for longer policy rates."

The better outlook on inflation came even as data showed continued strength in the U.S. economy, including durable goods orders and survey data from manufacturers.

The data was in contrast to Canadian retail sales that fell 0.2 per cent in March, weighed down by lower sales at furniture, home furnishings, electronics and appliances retailers, Statistics Canada said Friday.

The numbers underline a widening gap on what markets expect central banks to do, with a 65 per cent chance the Bank of Canada cuts in June while almost no expectations for a Federal Reserve cut this summer.

"We see divergence in central bank policy rate expectations," said Forrest.

Despite the increasing split, the Canadian dollar still managed to rise Friday, trading for 73.14 cents US compared with 72.98 cents US on Thursday.

The loonie has largely been bouncing around 72 and 73 cents for the past month, down from around the 75-cent mark where it started the year.

The July crude oil contract was up 85 cents at US$77.72 per barrel and the June natural gas contract was down 14 cents at US$2.52 per 1,000 cubic feet.

The June gold contract was down US$2.70 at US$2,334.50 an ounce and the July copper contract was down four cents at US$4.75 a pound.

Rising commodities helped boost the TSX energy index up 0.65 per cent and the base metals index up 1.3 per cent while most sectors outside of telecoms also rose.

The TSX utilities index was up 0.49 per cent, an area that in the U.S. has been a fairly steady area of growth, said Forrest.

"If you look year to date, the utility subsector in the S&P 500 has been leading the broader index, which we don't see very often," she said.

Part of the reason is the energy transition to a low-carbon economy will mean more demand, including in the nuclear sector, said Forrest.

"The broader undercurrent is that electricity demand is expected to to increase quite meaningfully over the coming years."

This report by The Canadian Press was first published May 24, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press