Market week: U.S. indices edge up

Possible U.S.-China trade deal boosts sentiment

Reports of a partial U.S.-China trade deal boosted the big U.S. stock indices on Friday, with additional support coming from an announcement by the U.S. Federal Reserve Board that it will buy US$60 billion per month in Treasury bills at least until the second quarter of 2020 to ease money market pressures and provide sufficient reserves for banks.

In Canada, Statistics Canada’s monthly Labour Force Survey for September showed a job gain of 53,700 in September following a gain of 81,100 in August, with the unemployment rate ticking down to 5.5% in the month. Most of the gain came in public sector employment and self-employment, while private sector hiring actually declined.

U.S. President Donald Trump announced on Friday that the U.S. and China had agreed to ease trade tensions with a deal that would see China buy US$40-US$50 billion in U.S. agricultural products. In exchange, the U.S. would eliminate tariff increases that were slated to go into effect on Oct. 15. However, nothing is ever certain in this trade dispute, and with the agreement to be finalized in three to five weeks, anything is possible, including a cancellation.

The S&P 500 Composite Index advanced 0.6% on the week, while the Nasdaq Composite Index is ahead 0.9%. While not precisely ebullient, the gains did reverse weakness experienced in the first week of the month. Against a backdrop of a strengthening Canadian dollar, Toronto’s S&P/TSX Composite Index closed Friday just a hair below breakeven, with a loss of 0.2% on the week, continuing a downtrend from its September highs. Even a 3.8% weekly gain in the price of crude oil, with a boost late in the week following a reported missile attack on an Iranian oil tanker off the coast of Saudi Arabia on Friday.

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