Toronto's main stock index chalked up its most robust single-day advance in roughly a month on Thursday, propelled by a broad rally in mining, technology and financial shares. The S&P/TSX Composite climbed 541.51 points, or 1.50%, to settle at 36,633.12 at the 16:00 EDT close, according to Reuters data.
The advance was led by the index's heavyweight sectors. Technology surged 3.7%, materials advanced 3.1%, and financials gained 1.4%. Combined, these three groups represent about 60% of the benchmark's weight, based on August 31 figures from S&P Dow Jones Indices. Financials hold the largest share at 34.0%, followed by materials at 19.0% and technology at 8.0%.
Investors found relief in a more nuanced outlook for U.S. monetary policy. Federal Reserve Governor Christopher Waller indicated Thursday that he would favor holding interest rates steady at the September 15-16 meeting if disinflation continues, but would support a hike if that trend falters. Following his remarks, futures markets trimmed the implied probability of a September rate hike to 50.4% from 63.2% a day earlier, as reported by Reuters.
The Toronto market outperformed its U.S. counterparts. The Nasdaq Composite rose 1.40% to 26,584.06, the Dow industrials added 624.16 points, or 1.18%, to 53,686.11, and the S&P 500 gained 81.11 points, or 1.06%, to 7,747.71. The simultaneous strength in growth stocks and commodity producers suggested investors were welcoming reduced pressure from higher interest rates.
Sector contributions were substantial. Using August 31 index weights and Thursday's sector returns, materials alone contributed roughly 0.59 percentage points to the index's gain, financials added about 0.48 points, and technology chipped in 0.30 points. Together, these three sectors accounted for nearly all of the 1.50% headline advance.
Precious-metals miners led the charge. Discovery Mining Ltd. (TSE:DSV) jumped 6.47% to C$13.33, while Lundin Gold Inc. (TSE:LUG) climbed 4.22% to C$101.58, and Barrick Mining Corp. (TSE:ABX) added 3.14% to C$63.03, based on Google Finance quotes at the close.
Technology shares outpaced even the strong materials sector. Thomson Reuters Corp. (TSE:TRI) advanced 5.01% to C$153.97 on volume of roughly 872,700 shares, exceeding its 30-day average of 728,500. Financial institutions and software companies extended the rally beyond gold and silver producers.
The index opened higher and maintained its strength throughout the session, rising 0.8% to 36,383.25 by 09:30 EDT, then touching 36,550.03 near noon. It added another 83.09 points, or 0.23%, in the afternoon, with about 15% of the day's total gain occurring after midday.
On the economic front, Statistics Canada reported that July merchandise exports fell 2.3% to C$76.1 billion while imports rose 2.2% to C$75.4 billion, narrowing the trade surplus to C$769 million from C$4.2 billion in June. The Canadian dollar strengthened to 72.52 U.S. cents near the equity close, up from 72.13 cents on Wednesday.
The Bank of Canada held its overnight rate at 2.25% on Wednesday, noting inflation near 3%, with core measures close to 2%. While banks stand to benefit from higher interest income, softer credit demand remains a concern. Canada's August jobs report, due Friday at 08:30 EDT, is expected to show a gain of 15,000 jobs and an unemployment rate of 6.4%, according to a Reuters poll. Strong U.S. payroll numbers could reignite rate-hike expectations, potentially challenging Thursday's gains in technology and gold stocks.
Kathleen Brooks, research director at XTB, characterized the move as a temporary pause. "After a rough start to September, it could be time to take a breather," she told Reuters. Despite Thursday's 1.50% advance, the TSX remained down 0.55% over the past five sessions as of 17:00 EDT.
Risks to the rally include a pullback in gold, silver, or copper prices, which would pressure the materials sector. Stronger-than-expected jobs or inflation data could revive rate-hike bets and weigh on technology shares. With financials, materials, and energy comprising nearly 70% of the benchmark, the index remains sensitive to credit conditions, commodity volatility, and geopolitical tensions in the Middle East.
