Strength in energy and base metals helped Canada’s main stock index post a small gain Thursday, while U.S. stock markets were mixed a day after reaching new records.
The S&P/TSX composite index closed up 84.08 points at 22,229.10.
In New York, the Dow Jones industrial average was up 78.84 points at 38,886.17. The S&P 500 index was down 1.07 points at 5,352.96, while the Nasdaq composite was down 14.78 points at 17,173.12.
The big story over the past few days has been the continuation of the AI-driven market strength, led by semiconductor giant Nvidia, said Greg Taylor, chief investment officer at Purpose Investments.
“It’s almost becoming a one-stock market,” said Taylor.
“We’ve seen it take off and start to challenge Microsoft, the biggest company in the index and the world, after passing Apple yesterday.”
It’s becoming “nerve-wracking” for investors, said Taylor, who are turning to more defensive picks to shore up against a worrying level of index concentration.
On Thursday, trading was muted ahead of the U.S. jobs report Friday, plus inflation data next week. As well, the U.S. Federal Reserve is set to announce its latest interest rate decision next week, though it’s almost certain to keep holding its key rate steady.
“Generally, with the markets up and hitting pretty big all-time highs yesterday, today’s just more of a cautious trading day and little more of a reason to take some profits,” said Taylor.
With the economic data, bad news continues to be good news for investors, he added, who are solidifying expectations for rate cuts in the U.S. to begin in September.
The Bank of Canada began cutting on Wednesday, while the European Central Bank announced a cut on Thursday.
“We’ve had a number of years where central bank policy globally has been very co-ordinated, where everyone cut at the same time and then everyone hiked at the same time,” said Taylor.
“Now we’re getting a bit of a fragmentation on that, as we’re seeing some central banks cut and others basically stay flat … so that can add some uncertainty and volatility in the second half of the year.”
Canada will also get fresh jobs data on Friday, which Taylor expects will be muted.
He noted that with investors taking some defensive positioning, commodities are bouncing back, helping buoy Bay Street.
“The commodities had really been under pressure in the last few sessions,” Taylor said.
The July crude oil contract was up US$1.48 at US$75.55 per barrel and the July natural gas contract was up six cents at US$2.82 per 1,000 cubic feet.
The August gold contract was up US$15.40 at US$2,390.90 an ounce and the July copper contract was up seven cents at US$4.68 a pound.
The Canadian dollar traded for 73.07 cents US compared with 73.01 cents US on Wednesday.
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