TORONTO – North American stock markets advanced at the end of the week despite historically poor employment figures resulting from the COVID-19 pandemic.
The S & P / TSX composite index closed up 132.87 points to 14,966.56 to end the week up 2.4%.
In New York, the Dow Jones industrial average rose 455.43 points to 24,331.32. The S&P 500 index rose 48.61 points to 2,929.80, while the Nasdaq composite rose 141.66 points to 9,121.32.
“I think there is simply extraordinary faith in the amount of fiscal and monetary policy that has been announced in the past six weeks,” said Giles Marshall, portfolio manager at Fiduciary Trust Canada.
The government and central banks of the United States and Canada have committed trillions of dollars to offset the impact of the new coronavirus that has brought the global economy to a halt.
The devastating impact on employment was revealed on Friday. Canada’s unemployment rate jumped to 13%, a fraction less than an all-time high, when nearly two million people were unemployed in April.
The numbers were better than expected, but would have been much worse if those who received the Canadian Emergency Response Allowance had been included. In this case, the unemployment rate would have been closer to around 17.8%, Marshall said.
In the United States, the official unemployment rate rose to 14.7%, with 20.5 million people losing their jobs in April. The rate would be 22.8% if it included those who abandoned research.
“The title numbers may be running a little better than the underlying numbers,” said Marshall.
Nevertheless, investors seem to ignore these figures, knowing that they will be horrible.
Marshall said there was good medical news, not good economic news, and some modest good news about the benefits in information technology and health.
“Elsewhere, it has been relentlessly gloomy. But there is this incredible confidence in monetary and fiscal stimuli, which has been triggered, and I think the market says that we saw this game book in the great financial crisis. .. and finally it’s Going to work. “
Marshall said he was more skeptical that the result would be a faster V-shaped recovery, adding that there were a lot of risks.
Although there is optimism about the availability of a vaccine later this year or next year, there will be darker earnings and jobs for the next two months, as well as the possibility of a second wave of infections and deaths.
Positive market sentiment was also supported on Friday by better news on the trade front with China and the United States, agreeing to put aside the differences over the virus to announce that they “fully expect to respect their bonds “as part of the phase 1 agreement they signed in January.
Eight of the eleven major sectors of the Toronto Stock Exchange were up, led by consumer discretionary, energy and financial services.
The consumer sector gained 2.9%, with BRP Inc. increasing 16.5% after obtaining a $ 600 million term loan.
Energy rose 2.7% due to higher crude oil prices, which also helped the loonie.
The Canadian dollar traded at 71.77 cents US compared to an average of 71.35 cents US on Thursday.
The July contract for crude oil increased from US $ 1.34 to US $ 26.17 per barrel and the June contract for natural gas fell 7.1 cents to US $ 1.82 per mmBTU.
This helped Enerflex Ltd. and Canadian Natural Resources to increase by 11.1% and 5.7% respectively.
The price of crude has increased by 126% from its lowest level but remains 56% below its level at the start of the year. It has benefited from production cuts and a slow increase in global demand as economies begin to reopen.
Health care fell 7% from Aphria Inc., while technology was slightly lower, as Shopify Inc. lost 2.7% after issuing 1.85 million shares for around US $ 1 billion.
Materials fell as the price of gold fell, while logging companies were stronger that day, thanks to a 10.5% gain from Norbord Inc.
This report from The Canadian Press was first published on May 8, 2020.
Companies in this story: (TSX: SSL, TSX: ELD, TSX: OSB, TSX: SHOP, TSX: APHA, TSX: CNQ, TSX: EFX, TSX: DOO, TSX: GSPTSE, TSX: CADUSD = X)
Ross Marowits, The Canadian Press