Canada’s main stock index was largely unchanged on the last trading day of the week, with mixed results across sectors, while U.S. markets were up, led by the Nasdaq.
The S&P/TSX composite index was up 13.98 points at 20,714.48.
In New York, the Dow Jones industrial average was up 28.67 points at 33,978.08. The S&P 500 index was up 10.13 points at 4,070.56, while the Nasdaq composite was up 109.30 points at 11,621.71.
A big market driver this year is the question of whether central banks can tame inflation while achieving a soft landing and so far markets appear somewhat optimistic about that, said Steve Locke, chief investment officer for fixed income and multi-asset strategies at Mackenzie Investments.
New data released Friday in the U.S. showed inflation continuing to cool in December while consumer spending softened, feeding into the growing sentiment that soon interest rate hikes will be paused by the Federal Reserve, said Locke.
“If you look at the yield curve, and the pricing over the next few Fed meetings, that pricing for rate hikes has been coming down a little bit. So the market is again thinking that the Fed may pause,” he said.
In fact, expectations seem to be favouring a rate cut by the fall, though Locke thinks that’s a little too optimistic at this point.
Nonetheless, this optimism about rates is good news for growth stocks, said Locke, which is likely contributing to the Nasdaq’s outsized gains compared to the other indexes Friday.
“Obviously growth stocks have had a pretty tough time relative to value (stocks) in 2022, and particularly some of the tech names,” he said. “So there’s probably a bit of a rebound effect.”
As earnings continue to roll in south of the border, Locke said he expects margin pressure on firms this year, with earnings hopefully remaining stable though likely not growing over the next couple of quarters.
The Canadian dollar traded for 75.11 cents US compared with 74.91 cents US on Thursday.
The March crude contract was down US$1.33 cents at US$79.68 per barreland the March natural gas contract was virtually unchanged at US$2.85 per mmBTU.
The February gold contract was down 60 cents at US$1,929.40 an ounce and the March copper contract was down five cents at US$4.22 a pound.