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Reassessment of BoC Rate Cut Expectations After Robust Canadian Jobs Report

The latest Canadian jobs data has led to a significant shift in market expectations regarding the Bank of Canada’s (BoC) interest rate decisions. Here’s a concise overview: Unexpected Job Surge : April saw the addition of 90,400 jobs , far surpassing the anticipated 20,000 . This robust employment growth has caused money markets to reassess the likelihood of an imminent rate cut by the BoC. Rate Cut Probabilities Altered : Prior to the jobs report, the probability of a rate cut in June was 58% , which has now decreased to below 50% . Markets are now leaning towards a cut in July, with a 70% chance. Economic Indicators : Despite the job increase, wage growth has decelerated to 4.8% annually, the slowest in ten months, hinting at potential slack in the labor market. Market Movements : The Canadian dollar and government bond yields reacted sharply to the news, with the dollar appreciating and the 2-year bond yield rising by 10 basis points . This data has not only influenced market pred
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S&P/TSX Composite Rises and Nasdaq Leads Wall Street Rally After Tech Earnings


On Friday, the S&P/TSX composite index saw gains, while U.S. markets also rose, driven by strong performances in tech stocks. The Nasdaq surged by two percent, fueled by impressive earnings reports from major tech companies like Microsoft and Alphabet.

Key Highlights:

  1. Tech Stocks Shine: Large tech names played a pivotal role in the rally. Both Microsoft and Alphabet reported solid earnings, boosting investor confidence. Alphabet even announced its first quarterly dividend.

  2. Interest Rates and Shareholder Returns: The higher interest rate environment has benefited companies with substantial cash reserves. These firms are now seeing better returns on their cash, allowing them to reward shareholders.

  3. Fed and Inflation: The U.S. Federal Reserve closely monitors inflation. The recent personal consumption expenditure report indicated that inflation remained stubbornly high in March but was in line with forecasts. Investors are still expecting at least one rate cut from the Fed later this year.

  4. Market Volatility: Despite recent economic reports coming in stronger than expected, the markets experienced volatility. April could potentially be the first down month for Wall Street after a significant rally earlier in the year.

Market Closings:

  • S&P/TSX Composite Index: Closed up 83.86 points at 21,969.24.
  • Dow Jones Industrial Average: Up 153.86 points at 38,239.66.
  • S&P 500 Index: Up 51.54 points at 5,099.96.
  • Nasdaq Composite: Up 316.14 points at 15,927.90.

Commodity Prices:

  • Canadian Dollar (CAD): Traded at 73.16 cents US.
  • Crude Oil (June Contract): Up 28 cents at US$83.85 per barrel.
  • Natural Gas (May Contract): Down three cents at US$1.61 per 1,000 cubic feet.
  • Gold (June Contract): Up US$4.70 at US$2,347.20 per ounce.
  • Copper (May Contract): Up four cents at US$4.56 per pound.

In summary, the tech sector’s strong performance drove market gains, while investors closely monitored inflation and interest rates. Despite recent volatility, the overall market remains resilient.


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