Canada Stocks: Gold gains lift TSX higher amid US government shutdown

Constellation Software

01/10/2025 15:58

Updates with morning prices

By Sanchayaita Roy

Oct 1 (Reuters) - Canada's commodity-heavy main stock index rose on Wednesday, led by materials, while investors assessed a partial U.S. government shutdown that threatened to delay key jobs data and potentially cloud the interest-rate outlook.

Toronto's S&P/TSX composite index .GSPTSE was up 0.41% at 30,147.28 points.

The U.S. federal government shut down much of its operations on Wednesday as deep partisan divisions prevented Congress and the White House from reaching a funding deal, a standoff that could lead to the loss of thousands of federal jobs.

Materials stocks .GSPTTMT gained 1.6% after gold prices rose to hit a new record high supported by safe-haven demand following the news.

"Political uncertainty rises in the U.S. that can support sentiment for gold and therefore sentiment for the material sector and the TSX eventually," said Angelo Kourkafas, senior investment strategist at Edward Jones.

The shutdown, which independent analysts warn could last longer than the budget-related closures of the past, comes as markets pin hopes on a dovish Federal Reserve policy, following two straight quarters of equity gains in the U.S.

"A lot of what's going to determine the impact will likely hinge on how long this government shutdown lasts... the longer the disruption, the bigger the impact. But at the same time, the economic damage would likely be minimal in the context of a $30 trillion economy", Kourkafas added.

Among other stocks, information and technology sub-index .SPTTTK rose 1.5% with shares of Constellation Software CSU.TO gaining 3.6%.

An index of healthcare shares .GSPTTHC rose 1.3% tracking gains in U.S. peers.

Vancouver-based Lithium Americas  jumped 20.8% after it said the U.S. Department of Energy has taken a 5% stake in the company, along with a separate 5% stake in its Thacker Pass lithium project joint venture with General Motors .

On the data front, Canada's manufacturing sector contracted at a steeper pace in September as an uncertain trading environment weighed on production and new orders.

South of the border, investors increased bets on a 25-basis-point rate cut by the Federal Reserve at its next meeting, after the ADP National Employment Report showed private sector jobs fell by 32,000 last month, following a revised 3,000 drop in August.

 (Reporting by Sanchayaita Roy in Bengaluru; Editing by Shailesh Kuber)

 ((Sanchayaita.Roy@thomsonreuters.com))