Canada’s main stock index rose on Friday, helped by gains in key energy sector amid a robust 2.5-per-cent surge in crude oil prices.
The energy sector climbed 2.3 per cent, just behind the 2.6-per cent gain in the tech sector. Consumer discretionary stocks were up 1.9 per cent.
Markets rebounded Friday after the U.S. and China said they will hold vice ministerial level trade talks in Beijing on Jan. 7 and 8 to try and resolve their dispute with less than two months left for their tariff truce to end.
The Sino-U.S. trade war, which has roiled global financial markets for the most part of last year, has played a major part in fueling fears of a global economic slowdown.
At midday, the Toronto Stock Exchange’s S&P/TSX composite index was up 177.19 points, or 1.25 per cent, at 14,389.94.
On the economic front, Canada added 9,300 jobs in December on an increase in part-time hiring, slightly more than expected, while the unemployment rate remained at an all-time low, according to data released by Statistics Canada.
The largest percentage gainers on the TSX were Hudson’s Bay Co., which soared 12.5 per cent after the company’s chairman announced a plan to buy Ontario Teachers' sake in the retailer.
Canada Goose Holdings Inc also gain, up 4.7 per cent, after announcing earlier this week that sales in its new Beijing location were strong.
U.S. stocks surged over 2.5 per cent on Friday, boosted by a robust U.S. jobs report, plans for fresh China-U.S. trade talks and as Federal Reserve Chairman Jerome Powell pledged patience and sensitivity to risks in the markets.
The rally puts Wall Street on course to erase all losses from a day earlier, when stocks plunged after slowing U.S. factory activity on the heels of Apple Inc’s dire revenue warning fueled fears of a global economic slowdown.
Nonfarm payrolls surged by 312,000 jobs in December, the largest gain since February and sailed past economists’ expectations of 177,000 jobs. Wages also rose, while the unemployment rate improved, the Labor Department said.
While the report allayed fears over slowing economic growth, there were some concerns that the healthy data would let the Fed stick with its projection for two interest rate hikes this year.
But Powell moved to mollify financial markets, saying that while economic momentum is solid, the Fed is sensitive to the risks highlighted by investors and will be patient with its monetary policy in 2019.
“His (Powell’s) comments are being interpreted as dovish,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“The things he said today are leading traders and investors to believe that the Fed is willing to potentially change their projections for rate hikes this year.”
All the 11 major S&P sectors were higher. Technology stocks , coming off their biggest one-day percentage drop since August 2011 on Thursday, jumped 3.8 percent, leading the gains.
The trade-sensitive industrials sector rose 2.7 percent after Beijing announced a new round of trade talks with Washington on Jan. 7-8 to try and resolve their dispute.
At midday, the Dow Jones Industrial Average was up 597.35 points, or 2.63 per cent, at 23,283.57, the S&P 500 was up 66.45 points, or 2.71 per cent, at 2,514.34 and the Nasdaq Composite was up 233.98 points, or 3.62 per cent, at 6,698.32.
The heavyweight FAANG stocks — Facebook Inc, Apple, Amazon.com Inc, Netflix Inc and Google-parent Alphabet Inc — surged between 3.6 per cent and 7.8 per cent, bolstering gains on the S&P and Nasdaq.
Despite the rally, U.S. stocks are anchored near mid-2017 lows, with a chunk of the losses coming last month in what was the S&P’s worst December since the Great Depression. The selloff was squarely due to mounting evidence of a global economic slowdown and fears of its effect on corporate profits.
Analysts now estimate earnings at S&P 500 companies rose 15.1 per cent in the fourth quarter, outpacing the 14.8 per cent growth in the year-ago quarter, according to Refinitiv’s IBES. But, that is lower than the 20 per cent growth forecast in early October.