Toronto stock index rises with U.S. markets, loonie falls on poor jobs report

TORONTO — The Canadian loonie shed nearly half a cent following a poor jobs report, while Canada's main stock index shrugged off the disappointing employment figures.

The Canadian dollar traded at 75.44 cents US down from an average of 75.91 cents US on Thursday after Statistics Canada said the economy lost 71,200 jobs in November for the biggest monthly drop since the financial crisis. The job losses pushed the unemployment rate up 0.4 of a percentage point to 5.9 per cent.

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"The market would be thinking or anticipating a potential reaction from the Bank of Canada," said Anish Chopra, managing director with Portfolio Management Corp. "So, there's a potential for an interest rate cut."

The central bank is set to make its next interest rate announcement on Jan. 9. On Wednesday, the bank announced it would keep its key interest rate target on hold at 1.75 per cent. It has remained at that figure since October of last year.

"This is still just one month," said Chopra of the disappointing job figures, arguing the Bank of Canada would need to see more evidence of a slowdown in the economy before cutting rates.

Meanwhile, the American government released positive jobs figures that buoyed major North American stock indexes.

America's unemployment rate matched a half-century low of 3.5 per cent in November, according to figures released by the U.S. Labour Department Friday. That's down from 3.6 per cent in October. Wages rose 3.1 per cent in November compared to the same month the previous year.

Major indexes south of the border jumped on the news. In New York, the Dow Jones industrial average advanced 337.27 points to 28,015.06. The S&P 500 index rose by 28.48 points to 3,145.91, while the Nasdaq composite gained 85.83 points to 8,656.53.

The American figures also provided a lift to the S&P/TSX composite index. It gained 142.05 points to 16,996.97.

A boost in the price of oil and copper also provided a lift to the TSX, which saw its energy sector make the biggest gains. Shares in the sector advanced, on average, by 4.49 per cent of their worth.

The March copper contract was advanced 6.2 cents to roughly US$2.73 a pound, while the January crude oil contract gained 77 cents to US$59.20 per barrel.

The gains in oil came as the Organization of the Petroleum Exporting Countries (OPEC) announced the agreed to cut crude production. OPEC, which had meeting since Thursday, said it decided to further cut production by 500,000 barrels per day on top of a 1.2 million barrels a day reduction the group has been observing for the past three years.

The February gold contract, meanwhile, plummeted US$18.00 to US$1,465.10 an ounce during "a risk on day in the markets," said Chopra, meaning investors rotated out of the safe-haven commodity.

The January natural gas contract shed 9.3 cents to US$2.33 per mmBTU.

This report by The Canadian Press was first published Dec. 6, 2019.

— With files from The Associated Press

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

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