TSX Futures Rise as Rate Hike Bets Fade

The S&P/TSX Composite Index rose over 0.5% to trade above 36,000 on Friday, reaching a fresh record as mining stocks rallied. Gold prices surged as weaker US labor data and lower energy prices reduced expectations of a Federal Reserve rate hike this year. The US economy unexpectedly shed jobs in July, while oil prices wavered amid uncertainty over a potential US-Iran deal to restore exports through the Strait of Hormuz. Agnico Eagle and WPM jumped over 7%, while Barrick gained 5.5% and other gold miners rose between 4% and 10%. In contrast, banking and broader sectors weakened as strong Canadian employment data raised the prospect of a BoC rate hike if energy prices remain elevated. Canada's unemployment rate fell 0.1 percentage point to 6.4%, slightly below forecasts of 6.5%, while employment increased by 75,000, well above expectations for a 15,000 gain. RBC and TD Bank both shed about 0.5%.

Futures tracking the S&P/TSX Composite Index moved higher on Friday after the release of Canadian employment data and a key US jobs report. Canada's unemployment rate edged down 0.1 percentage point to 6.4%, slightly below forecasts of 6.5%, while employment increased by 75,000, well above expectations for a 15,000 gain. In the US, the economy unexpectedly shed 23,000 jobs, compared with forecasts for an 80,000 increase. The strong Canadian labor backdrop and softer US employment conditions limited risks of a hawkish Fed while strengthening the case for a potential hike by the BoC, should energy prices remain higher. Meanwhile, oil prices were volatile as markets assessed Iran-Oman negotiations, easing energy inflation concerns and supporting financial stocks and the broader index. Gold prices also rose as expectations of US rate hikes receded, boosting mining stocks.

The S&P/TSX Composite Index edged down to close at 36,136 on Thursday, easing from a record high as investors assessed uncertain prospects for a US-Iran peace deal and another round of corporate earnings. Reports indicated that Iran plans to bar US and Israeli vessels from the Strait of Hormuz and require compensation from countries it considers hostile before allowing passage. Higher wholesale fuel prices pushed bond yields up. Financial stocks closed mixed. Brookfield fell 1.1% and Scotiabank lost 0.2%, while RBC and TD Bank edged higher. Celestica plunged 13% after pricing a common share offering at a significant discount to the previous session's close. Lundin Mining fell nearly 3% despite reporting higher second-quarter revenue. Meanwhile, Canadian Natural (+1.6%) gained after beating second-quarter profit estimates. Shopify rose 2.2% after at least six brokerages raised their price targets. WPM (+1.9%) and Sun Life Financial (+0.8%) are set to report earnings after the close.