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Canada’s main stock market index closed above the 20,000 level for the first time on Friday as higher commodity prices bolstered the shares of resource companies.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 87.80 points, or 0.4%, at 20,029.19. Investors say that 20,000 is a key psychological level.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.6% as spot gold added 1.1% to $1,890.65 an ounce after a 2% tumble on Thursday, its biggest since February.

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The energy sector jumped 1.4% as oil rose, with Brent topping $72 a barrel for the first time since 2019, as OPEC+ supply discipline and recovering demand countered concerns about a patchy COVID-19 vaccination rollouts around the globe.

Canada lost 68,000 jobs in May, more than the average analyst prediction for a loss of 20,000. The unemployment rate climbed to 8.2%, Statistics Canada data showed.

U.S. stocks climbed on Friday, led by technology shares, after a tepid U.S. monthly jobs report relieved investor concerns the Federal Reserve might rein in monetary stimulus soon.

U.S. employers increased hiring in May and raised wages as they competed for workers. But the nonfarm payrolls increase of 559,000 jobs was below the 650,000 forecast of economists polled by Reuters.

Investors were concerned that a robust jobs report that pointed to rising inflation could prompt the Fed to pull back on stimulus put in place during the pandemic.

“It keeps pressure off the Fed and will enable them to keep their low interest rate policy in place longer and take more of a wait-and-see attitude,” said Jack Ablin, chief investment officer at Cresset Capital Management. “The opportunity to keep rates low is good news for risk takers.”

Unofficially, the Dow Jones Industrial Average rose 180.4 points, or 0.52%, to 34,757.44, the S&P 500 gained 37.14 points, or 0.89%, to 4,229.99 and the Nasdaq Composite added 199.98 points, or 1.47%, to 13,814.49.

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The heavyweight S&P 500 tech sector jumped, as longer-dated U.S. Treasury yields fell.

Tech and other growth stocks are seen as particularly vulnerable if inflation drives up bond yields and more heavily discounts the value of future cash flows. The Russell 1000 growth index outperformed the counterpart Russell value index.

“It’s just a risk-on trade because the market believes rates are going to stay lower for longer,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Overall, the S&P 500 is up some 12% this year.

Shares of billionaire William Ackman’s Pershing Square Tontine Holdings dropped after news it was in talks to buy 10% of Universal Music Group.

Investors were watching progress for proposed U.S. infrastructure spending. President Joe Biden was meeting with the main Republican negotiator on Friday in an effort to craft a deal that can satisfy their sharply divided camps.

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The pan-European STOXX 600 index rose 0.39% after hitting a record high this week. MSCI’s all-country world index, which tracks shares in 50 countries across the globe, gained 0.71%.

A stronger-than-expected jobs report would have heightened worries that the Fed might contemplate paring back its bond-buying program and raising interest rates.

“This lower payrolls number should keep investor concerns about inflation muted – as long as the job market remains depressed, it’s hard to see wage inflation jumping higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Zaccarelli added that there may be some lingering concerns about overall price inflation as the Fed keeps rates lower for longer amid unprecedented fiscal stimulus.

Market whispers had been for a stronger number, analysts said.

The dollar index fell 0.357%, with the euro up 0.31% to $1.2162.

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New orders for U.S.-made goods fell more than expected in April as a global semiconductor shortage weighed on production of motor vehicles and electrical equipment, appliances and components.

Investors have been parsing economic data to gauge whether inflation could prove sticky enough to force the Fed’s hand on tapering.

“Will prolonged, low-wage inflation allow for a longer period of low, overall price inflation to reign? Or will a Fed that is slow to raise rates - because they are concerned about a weak labor market - create a higher-than-expected overall inflation regime? It’s hard to know in advance, but we are all watching the experiment in real time and the consequences for all of us are high,” added Independent Advisor Alliance’s Zaccarelli.

Reuters

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