North American stock markets up slightly to start June after two strong months

TORONTO — North American stock markets followed two strong months of recovery by kicking off June slightly higher amid cautious optimism about economic reopenings.

The S&P/TSX composite index closed up 43.38 points at 15,236.21 after rallying by more than 35 per cent since March's lows.

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In New York, the Dow Jones industrial average was up 91.91 points at 25,475.02. The S&P 500 index was up 11.42 points at 3,055.73, while the Nasdaq composite was up 62.18 points at 9,552.05.

"At this stage, it's not surprising to see the markets have a bit more of a subdued day, particularly given that later this week we'll get important labour market data," said Craig Fehr, investment strategist at Edward Jones.

Investors will be looking past what is expected to be a horrendous May jobs report on Friday for any incremental information about the pace of the economic reopening "which at this stage is really the undercurrent behind this big rally," he said in an interview.

Millions of Americans have filed jobless claims over the past seven weeks, but the weekly number of new claims has been decreasing.

The additional jobs data will indicate the shape of the recovery and equity market performance, Fehr said.

"The market has shifted sights forward to the second half of the year and the prospects for the economy reopening for demand returning and hope what that means for corporate profits."

Fehr said the market rally isn't "fully built on sand" but the magnitude of the increase isn't pricing in some choppiness.

"As we look forward over the course of June and throughout the summer, I think we'll probably see a little bit more volatility re-emerge than what we've seen over the past six or seven weeks, just as we continue to get a bit more of a combination of good news and disappointing news."

Tempering the optimism are concerns about a second wave of infections that would force the reinstatement of containment measures and increasing tensions between the U.S. and China, Fehr said.

"They're just not dampening all of the animal spirits in the market at the moment," he said. "I think we're seeing investors that are still willing to look to the broader trajectory of the economy. And that's what's fostering the more positive tone from stocks lately."

The Canadian dollar traded for 73.37 cents US compared with 72.53 cents US on Friday.

Four of the 11 major sectors on the TSX were higher led by consumer discretionary, energy, financials and materials.

Discretionary was helped by a 5.8 per cent increase for shares of clothing retailer Aritzia Inc. and five per cent gain for auto parts supplier Martinrea International Inc.

Energy climbed 1.9 per cent despite a slight dip in crude oil prices with Frontera Energy Corp. up nearly six per cent, MEG Energy Corp. 5.6 per cent higher and Husky Energy Inc. up 5.1 per cent.

The July crude contract was down five cents at US$35.44 per barrel and the July natural gas contract was down 7.5 cents at US$1.77 per mmBTU.

Oil fell despite reports that OPEC and Russia were close to extending the timeline for production cuts.

"I think the market's waiting for more concrete details as opposed to speculation," Fehr said to explain why oil prices didn't increase.

The heavyweight financials sector was up 1.5 per cent while materials gained nearly one per cent with First Majestic Silver Corp. and First Quantum Minerals Ltd. up 5.8 and 5.2 per cent respectively.

The August gold contract was down US$1.40 at US$1,750.30 an ounce and the July copper contract was up 4.5 cents at US$2.47 a pound.

Consumer staples was the big loser, pulled down by grocers. Health care lost nearly one per cent as Canopy Growth Corp. was off eight per cent while Hexo Corp. gained 9.4 per cent.

Technology fell but Blackberry Ltd. gained 4.2 per cent to $6.67, the same level as the beginning of March.

This report by The Canadian Press was first published June 1, 2020.

Companies in this story: (TSX:FR, TSX:FM, TSX:WEED, TSX:HEXO, TSX:FEC, TSX:BB, TSX:MEG, TSX:HSE, TSX:ATZ, TSX:MRE, TSX:GSPTSE, TSX:CADUSD=X)

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