S&P/TSX composite gains 20 points Thursday with U.S. markets closed for July 4

Canada’s main stock market eked out a gain on Thursday, helped by strength in the telecom, utility and energy sectors.

The S&P/TSX composite index closed up 20.35 points at 22,244.02. The increase came as U.S. stock markets were closed for the July 4 holiday.

“It’s a slow trading day in Canada because of the U.S. holiday,” said Anish Chopra, managing director with Portfolio Management Corp.

Investors are focused on Friday, which will bring fresh jobs numbers in both the U.S. and Canada, said Chopra. The data could have implications for interest rate cuts in both countries.

Economists expect the U.S. economy to have added about 190,000 jobs in June, down from May, said Chopra.

“The U.S. economy has been quite strong despite the rise in rates … over the last couple of years,” he said. “Economists are still expecting reasonable payroll growth.”

The report will add to the pile of data that the U.S. Federal Reserve will draw upon as it considers when to start cutting its key interest rate. Currently, markets see September as a real possibility, said Chopra.

The central bank is still looking for more evidence that inflation is headed sustainably toward its target, he added.

“They’ll need some real, strong economic evidence … before they bring rates down in the U.S., that inflation is under control, because the risk in the U.S. is that inflation starts to tick back up again. And that’s not something that they want to see,” said Chopra.

The Fed won’t want to see a big surprise on the jobs report, he said.

Markets at the beginning of the year were expecting up to six cuts from the Fed in 2024, but those expectations were steadily pared back as the economy proved resilient.

Meanwhile in Canada, there’s much more evidence of a slowing economy, which is why the Bank of Canada recently announced its first interest rate cut in years, Chopra said. Friday’s jobs report is expected to add to that evidence.

The central bank could cut a second time this month, but if the jobs report is stronger than expected, officials might hold off, said Chopra.

“Investors, as well as the Bank of Canada, will be looking for confirmation that the economy continues to slow, and that it gives the Bank of Canada evidence or ammunition or support for continued interest rate decreases,” he said.

The Canadian dollar traded for 73.46 cents US compared with 73.33 cents US on Wednesday.

Commodity markets were also closed for regular trading.