TSX gains on cooling wages, energy stocks rally

Canada’s stock index rose on Friday as investors cheered cooling wages both domestically and in the United States, with the commodity-heavy index headed for its best week in six as gold stocks rallied on firm bullion prices against a softening dollar.

At 10:11 a.m. ET (1511 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 178.02 points, or 0.91%, at 19,684.86, hitting its highest level in three weeks.

The energy sector led gains by 1.9%, tracking the rise in crude prices.

Wall Street’s main indexes gained as cooling wages and a moderation in US jobs growth in December calmed worries over the Federal Reserve’s rate-hike trajectory.

Canada also added 104,000 jobs in December, far ahead of analyst forecasts.

The unemployment rate rose by 5.0%, a surprise drop compared to analysts’ forecasts of 5.2%.

“The market is narrowing in on the fall in wage growth both in the US and Canada, which suggests that some of the inflation pressures could be weakening,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.

The average hourly wage for permanent employees rose 5.2% in December on a year-over-year basis, down from 5.4% in November.

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“As long as we can get some slowdown in wage growth while the economy continues to add jobs at a solid pace, it provides some hope that even though that path for a soft landing is narrow, it is potentially achievable,” Kourkafas added.

Just over two weeks from now, the central bank is expected to raise interest rates by 25 basis points as fears of an economic slowdown loom.

The benchmark index begins the year on an upbeat note, set to end the first week of 2023 higher, despite impending rate hikes by the Bank of Canada.

Gold miners were on track for their biggest weekly gains in three months, tracking firm gold prices as the dollar weakened on expectations of a less-hawkish Fed.

Among stocks, Vermilion Energy inched up 1.4% after it raised its quarterly cash dividend by 25% and reinstated its share buyback program.