Friday saw a boost in the markets after the Canadian September employment change exceeded expectations with an increase of 46.7K jobs. This positive news helped push the S&P 500 up by 0.7% to touch a fresh record high. However, the Canadian dollar continued its downward trend for the eighth consecutive day.
In the US, the Producer Price Index (PPI) for final demand in August showed a year-over-year increase of 1.8%, slightly higher than the estimated 1.6%. Excluding food and energy, the PPI rose by 2.8%, beating the 2.7% estimate. Additionally, the University of Michigan’s preliminary consumer sentiment for October came in lower than expected at 68.9, below the forecast of 70.8.
The Bank of Canada’s business outlook survey reported weak demand, while the Federal Reserve’s Logan mentioned that a less-restrictive policy could help cool inflation. Meanwhile, the Baker Hughes oil rig count increased by 2 to 481.
Tesla shares took a hit, falling by 8% after a robotaxi event that lacked details. On the other hand, gold prices rose by $26 to $2655, US 10-year yields dropped by 1 bps to 4.08%, and WTI crude oil prices decreased by 30 cents to $75.56. The New Zealand dollar led the pack, while the Japanese yen lagged behind.
The market experienced a risk-on day, with stock futures initially negative but turning positive at the US equity open. This shift was possibly influenced by strong bank earnings, particularly from J.P. Morgan, which indicated steady consumer spending. The S&P 500 reached record highs, with small caps performing well and the Russell 2000 index rising by 2%.
Looking ahead, there is anticipation of further Chinese fiscal stimulus announcements in the coming days, which could impact early-week trading. The yen underperformed, possibly due to risk sentiment and position squaring ahead of the US and Japanese elections. The Canadian dollar faced pressure despite the positive jobs data, declining for eight consecutive days. The upcoming Bank of Canada decision on October 23 will be closely watched for signals on global central bank easing.
As US bonds and Canadian markets are closed on Monday for a holiday, investors will have time to reflect on the recent market movements. Overall, despite some mixed data, the markets showed resilience and optimism, setting the stage for potential developments in the week ahead. Have a great weekend ahead!
