Canada’s benchmark S&P/TSX Composite Index extended its winning streak on Friday, climbing 308.17 points, or 0.88%, to close at 35,274.84.
The gains marked a third consecutive session of advances, driven largely by a surge in gold-linked metal stocks that pushed the materials sector sharply higher.
Softer-than-expected U.S. nonfarm payrolls data, released Thursday, triggered the rally by reducing investor fears over further Federal Reserve interest rate increases.
The U.S. economy added just 57,000 jobs in June, falling well short of the 110,000 forecast and a downwardly revised 129,000 recorded in May.
Following the weak report, investors scaled back their rate hike expectations considerably, with bets on a quarter-point hike at the July 28-29 Fed meeting sitting at just 21.90%, according to the CME Group’s FedWatch Tool.
The probability of the Fed holding rates steady in the 3.50% to 3.75% range stood at 78.10%, giving markets a dose of relief that lifted commodities and resource stocks.
Ten of the eleven sectors on the TSX posted gains, with materials leading all sectors higher with an advance of 2.44% on the session.
Healthcare rose 1.29%, industrials gained 0.90%, IT climbed 0.79%, consumer discretionary added 0.76%, and energy moved up 0.62% as optimism spread across the index.
Among individual stocks, Southern Cross Gold Consolidated Ltd surged 9.56%, Discovery Silver Corp jumped 9.09%, Wesdome Gold Mines Ltd gained 8.11%, GFL Environmental Inc rose 7.60%, and 5N Plus Inc added 6.57%.
Consumer staples was the only sector to finish in the red, slipping 0.10%, with Empire Company Ltd, Metro Inc, Loblaw, Western George, and The North West Company Inc among the notable losers.
Geopolitical developments involving the U.S. and Iran also shaped sentiment, with a Memorandum of Understanding signed on June 17 establishing a 60-day ceasefire and reopening the Strait of Hormuz to shipping traffic.
The Wall Street Journal reported that U.S. President Donald Trump has decided to give diplomacy a full chance before resuming aggressive measures in the region.
Trump told CNBC that Iran has accepted “just about everything” the U.S. demanded in the ongoing indirect negotiations, adding to broader market optimism.
Canadian investors and businesses are also closely watching trade developments after the U.S. declined on July 1 to renew the Canada-United States-Mexico Agreement for a new 16-year term.
U.S. Trade Representative Jamieson Greer said in an interview with Global News that the U.S. is concerned China could use Canada as a backdoor to enter U.S. markets, adding complexity to already strained trade relations.
Economists suggest the U.S. is moving toward bilateral negotiations with Canada and Mexico separately, though formal U.S.-Canada talks have not yet begun.
CUSMA remains in force and mandates annual reviews until its scheduled expiry in 2036, though its future remains uncertain given the current diplomatic environment.
