TSX closes higher on better than expected U.S. payrolls data, trade developments

Published 06/06/2025, 06:50 AM
Updated 06/06/2025, 05:10 PM
© Reuters

Investing.com -- Canada’s main stock index on Friday was headed up near the record high touched Tuesday, after a better than expected job reports in U.S. and the chances of a trade deal between Ottawa and Washington.

The Toronto Stock Exchange’s S&P/TSX Composite advanced 86.8 points or 0.3%.

At the 4:00 ET close, the S&P/TSX 60 index closed higher by 6.5 points, or 0.4%.

Underpinning sentiment during the session were hopes that Canadian Prime Minister Mark Carney and U.S. President Donald Trump could reach a de-escalation in recent trade tensions between the two neighbors. Canadian Industry Minister Melanie Joly said Carney and Trump were in direct contact.

The Carney administration launched a ’One Canadian Economy’ Act to unify trade and expedite approvals. “Canada’s a country that used to build big things,” Carney said at a press conference. “But in recent decades it’s become too difficult to build in this country.” To address these concerns, the bill would cut federal project approval times from five years to two by creating a one-stop permitting office and applying a “one-project, one-review” standard to infrastructure proposals.

Demand for Canadian goods was dented in April by elevated U.S. tariffs, a trend that factored into a widening in Canada’s trade deficit to an all-time peak of C$7.1 billion.

A jobs report from Statistics Canada revealed that Canada’s labor market showed unexpected resilience in May, adding 8,800 jobs compared to consensus expectations for a decline of 11,900. The unemployment rate, meanwhile, edged up to 7.0%, in line with projections, as labor force participation remained steady.

CIBC (TSX:CM) (TSX:CM)’s Andrew Grantham commented, "While today’s data were not quite as bad as expected, there’s still signs of slack gradually building in the labour market which supports our call for a return to interest rate cuts at that July meeting, albeit admittedly with a lot more data and tariff news still to come before that decision."

U.S. stocks advance

U.S. stocks rose on Friday after the jobs report helped allay worries about the economy. A partial recovery in Tesla (NASDAQ:TSLA) from a sharp plunge a day earlier also drove the market up.

By the 4:00 ET close, Dow Jones rose 442.9 points, or 1.1%, S&P500 climbed 61 points, or 1%, and Nasdaq composite gained 231.5 points, or 1.2%.

Data showed nonfarm payroll increased by 139,000 jobs last month. Economists were projecting 126,000 jobs in May, down from 177,000 in the prior month, while the unemployment rate is expected to match April’s reading of 4.2%.

Trump and Musk’s bust-up especially had pulled down shares in electric carmaker Tesla on Thursday.

Trump’s flagging of a “very good” call with Chinese President Xi Jinping sparked some optimism over renewed trade talks between Washington and Beijing, although Wall Street took little support from this.

Fed funds futures imply little chance of a rate cut until September, although a move at that time is about 90% priced in, with another expected in December.

Investors are increasingly anticipating a rebalancing of the S&P 500, and are especially eyeing the potential addition of Robinhood Markets Inc (NASDAQ:HOOD). The trading platform’s stock has risen increasingly on inclusion expectations.

Gold trades down after better job reports

Gold prices reversed course to trade down after a better U.S. jobs report pour cold water on widely expected imminent Federal Reserve rate cuts this year.

Bullion, along with broader metal prices, also benefited from a softer dollar, which languished near two-year lows amid few positive cues over the U.S. economy.

Spot gold fell 0.63% at $3,331.69 an ounce, as of 5:00 ET, while gold futures for August dropped 1.3% to $3,330.70/oz.

Oil prices on pace for weekly gain

Oil prices jumped, experiencing the first positive week in three amid growing expectations that global supplies will be tighter than initially expected this year.

At 5:00 ET, Brent futures rose 2% to $66.63 a barrel, and U.S. Crude Oil WTI Futures crude futures increased by 2.2% to $64.79 per barrel.

On a weekly basis, both benchmarks were on track to settle higher after falling for two straight weeks. Brent has advanced 2% this week, while WTI is trading 4% higher.

(Scott Kanowsky and Pratyush Thakur also contributed to this article)

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