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Energy and base metals help lift the S&P/TSX composite on Thursday, with US stock markets mixed

TORONTO – Strength in energy and base metals helped the main Canadian stock index post a small gain Thursday, while U.S. stock markets were mixed a day after hitting new records. The S&P/TSX composite index closed 84.08 points higher at 22,229.10.

TORONTO – Strength in energy and base metals helped the main Canadian stock index post a small gain Thursday, while U.S. stock markets were mixed for a day after hitting new records.

The S&P/TSX composite index closed 84.08 points higher at 22,229.10.

In New York, the Dow Jones industrial average rose 78.84 points to 38,886.17. The S&P 500 index fell 1.07 points to 5,352.96, while the Nasdaq index fell 14.78 points to 17,173.12.

The big story in recent days is the continuation of AI-driven market power led by semiconductor giant Nvidia, says Greg Taylor, chief investment officer at Purpose Investments.

“It’s almost becoming a one-stock market,” Taylor says.

“We watched it take off and challenge Microsoft, the largest company in the index and in the world, after overtaking Apple yesterday.”

It’s becoming “nerve-wracking” for investors, says Taylor, who are turning to more defensive choices to hold their own against worrying levels of index concentration.

Trading was subdued on Thursday ahead of Friday’s US jobs report, plus inflation data next week. Moreover, the US Federal Reserve will announce its latest interest rate decision next week, although it is almost certain that it will keep its policy rate stable.

“Overall, with the markets moving higher and hitting pretty high all-time highs yesterday, today is just a more cautious trading day and not much reason to take some profits,” Taylor said.

Given the economic data, bad news remains good news for investors, he added, reinforcing expectations that U.S. interest rate cuts will begin in September.

The Bank of Canada started cutting spending on Wednesday, while the European Central Bank announced a cutback on Thursday.

“We’ve had a number of years where central bank policies around the world were very coordinated, where everyone cut at the same time and then all went up at the same time,” Taylor said.

“Now we are somewhat fragmented in that regard as we see some central banks cutting and others basically staying flat… so that could create some uncertainty and volatility in the second half of the year.”

Canada will also get new jobs data on Friday, which Taylor expects to be subdued.

He noted that as investors adopt defensive positioning, commodities are recovering, helping to buoy Bay Street.

“Commodities have been really under pressure over the last few sessions,” Taylor said.

The July crude oil contract rose $1.48 to $75.55 per barrel and the July natural gas contract rose 6 cents to $2.82 per 1,000 cubic feet.

The August gold contract rose US$15.40 to US$2,390.90 an ounce and the July copper contract rose seven cents to US$4.68 a pound.

The Canadian dollar traded for 73.07 cents in the US compared to 73.01 cents US on Wednesday.

This report by The Canadian Press was first published June 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Rosa Saba, The Canadian Press