Canada’s commodity-heavy main stock exchange ticked higher on Monday as worries over a potential U.S. government shutdown contributed to a spike in gold prices.
The S&P/TSX composite index ended up 210 points or 0.71% at 29,971.91.
Index gained in the prior session, buoyed by growth in domestic gross domestic product in July after three straight months of contraction. Mining and manufacturing partially contributed to the expansion, the figures showed.
U.S. stocks rise
U.S. stocks were trading higher on Monday, as investors awaited the release of a key jobs report later in the week and eyed the implications of a looming federal government shutdown.
At 4:00 p.m. ET (20:00 GMT), the blue-chip Dow Jones Industrial Average rose by 68 points, or 0.2%, the benchmark S&P 500 rose 0.3%, and the tech-heavy Nasdaq Composite added 0.5%.
The main averages rose to end the prior session on Friday, underpinned by fresh U.S. inflation data that broadly met expectations. Still, the three indices finished lower for the week, with the benchmark S&P 500 and tech-heavy Nasdaq Composite in particular snapping three-week winning streaks.
Nonfarm payrolls, possible government shutdown in focus
Attention is turning to the unveiling of September’s nonfarm payrolls report later this week, which could provide a glimpse into the state of the American labor market.
Supporting a cooling jobs picture has been a major focus for Federal Reserve policymakers. When the central bank slashed interest rates by 25 basis points earlier this month, officials widely suggested that a need to prioritize the slowing employment situation over signs of sticky inflation.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. A collection of rate projections from the Fed also showed that many members are anticipating further drawdowns before the end of the year. In theory, cutting rates can spur on investment and hiring, albeit at the risk of driving up prices.
Economists are anticipating that the U.S. added 51,000 roles this month, compared to 22,000 in August. The unemployment rate, meanwhile, is tipped to equal August’s level of 4.3%.
Observers have predicted that, given elevated inflation data, a strong jobs report could persuade the Fed to roll out further rate cuts at a more measured pace.
Traders are currently pricing in roughly 40 basis points of Fed easing by the end of 2025, around 25 basis points below the level seen earlier this month.
"A jobs number [less than] 75,000 will probably keep the Fed on track for a [...] cut [at its next meeting on October 29], but something [greater than] 115K with the core PCE just below 3% could spur" Fed Chair Jerome Powell and his colleagues to skip a reduction at the gathering, analysts at Vital Knowledge said in a note.
Yet worries remain that a possible U.S. government shutdown this week may delay the publication of the jobs numbers.
Congressional lawmakers are currently facing an impending deadline to pass a stopgap funding bill before the fiscal year ends on Tuesday. If the federal government would enter its 15th partial shuttering since 1981.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Republicans currently control both chambers of Congress, although the votes of some opposition Democrats would be needed to pass the legislation. However, Democrats have so far rejected a short-term bill, calling for any potential bill to reverse Republican reductions to health care programs.
Leaders from both parties in Congress are due to meet with President Donald Trump -- a Republican -- at the White House on Monday to discuss the matter. Speaking to Reuters over the weekend, Trump said he has "the impression" that Democrats may want to reach an agreement.
Gold’s new record high
Gold prices hit a record high above $3,800 per ounce as safe-haven demand was boosted by the concerns over a potential U.S. government shutdown, which weighed on the U.S. dollar.
Ongoing bets that the Fed will continue to lower interest rates also buoyed the yellow metal. Bullion tends to perform well when rates are brought down, as well as in times of economic or geopolitical uncertainty.
By 12.05 ET, spot gold had jumped by 1.3% to $3,858.39/oz. Gold futures had risen by 0.8% to $3,840.20/oz at around 6.14 ET.
Oil prices dip
Elsewhere, oil prices slumped, dented by the prospect of additional global supplies following the resumption of crude oil exports from Iraq’s Kurdistan region through Turkey after a 2-1/2 year halt.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is also reportedly likely to approve another crude production hike of at least 137,000 barrels per day at its meeting on Sunday, according to Reuters. OPEC+ has recently been pumping roughly 500,000 bpd less than its target level, even as traders fret over a projected supply glut.
Brent crude futures were down by 1.5% at $68.17 a barrel by 06:14 ET, while West Texas Intermediate crude futures fell by 1.7% to $64.61 per barrel.
