TSX fell due to recession fears despite rate cut hopes

From Yahoo Finance: 2024-07-05 16:46:21

Canada’s main stock index fell sharply, ending the week’s rally, as recession fears overshadowed weak U.S. and Canada jobs data. Toronto Stock Exchange’s S&P/TSX composite index closed down 0.77% at 22,072.21 points. Resource companies led the index down on fears of a recession. Markets are pricing in a 75.2% chance of a September rate cut by the Fed.

Rate cut hopes gained traction after U.S. data showed a 2.5 year high unemployment rate of 4.1%, sparking positive reactions from mining and materials companies. Canadian labor force survey reported a 29-month high jobless rate of 6.4%. Share prices of resource exploration and commodity-based companies plummeted due to economic weakness.

Economists warn that a continuous rise in jobless numbers could indicate a looming recession, as the possibility of a 25 basis point cut by the Bank of Canada in July rose to 60%. A consistent rise in Canada’s jobless rate since January last year has been concerning. The weakness in the U.S job market boosted Nasdaq and S&P 500 indexes.

Gold mining shares in Canadian companies, like OceanaGold Corp and Calibre Mining Corp, rose more than 5%, offering support to the composite index. Rising gold prices pushed gold mining shares higher. The Canadian 10-year benchmark bond yield dropped over 10 basis points to 3.5%, following a decline in the U.S. counterpart.

Teck Resources’ shares rose nearly 1% after the Canadian government approved Glencore’s $6.93 billion takeover of its steelmaking coal unit with strict conditions to maintain jobs. In corporate news, Teck Resources’ shares were up after the approval of Glencore’s takeover.



Read more at Yahoo Finance: TSX dragged down as recession fears trump rising rate cut bets