04:23 PM EDT, 04/05/2024 (MT Newswires) -- The Toronto Stock Exchange's S&P/TSX Composition Index posted a record close on Friday, climbing 212.59 to close at 22,264.38 points with strength in most sectors following a weak Canadian March jobs report even as jobs growth in the United States soared last month .

Much focus was on the jobs reports in the two countries, as market participants looked for more clues as to when the rate cutting cycle might start in North America. Canada reported a loss of 2,200 jobs in the month, while new positions in the US rose by 303,000, well above the consensus estimate for a rise of 200,000 according to Marketwatch.

Jerome Hass, Portfolio Manager at Lightwater Partners, on Canada's BNN TV just after the close of trade said he was "surprised" by the stocks markets today, adding that if he had been asked at 8.31am ET this morning after the release of the Canada and US jobs data if the market would be up 1% here, he would have said no.

Nearly all sectors higher rose on the day. The sole decliner on the day was battery metals, down 0.166%

West Texas Intermediate (WTI) crude oil closed higher on Friday, rising to a fresh five-month high as supplies lag demand with OPEC+ cuts continuing, while geopolitical risk is rising on the threat of a wider Middle East war and the United States added far more new jobs than expected last month.

WTI crude oil for May delivery closed up US$0.32 to settle at US$86.91 per barrel while June Brent crude, the global benchmark, was last seen up C$0.60 to US$91.25.

Gold rose to a fresh record on Friday even as the dollar and treasury yields climbed after the United States added far more new jobs than expected last month as Middle East tensions rise after Iran vowed to retaliate following an attack on its embassy in Syria this week.

Gold for June delivery closed up US$36.90 to settle at US$2,345.40 per ounce.

But natural gas futures edged lower on mild forecasts and swollen inventories of the fuel.

Investors were focused on jobs data in Canada and in the United States.

Derek Holt, Vice-President & Head of Capital Markets Economics at Scotiabank, published a note entitled "Calling Bogus on the Canadian Jobs Report" in which he said, "on the surface it looked like Canadian employment was roughly flat, but added "details were better."

In his opinion, the roughly 9bps relative outperformance of Canada 2-year notes to US two-year notes post-data from both sides of the border is "an exaggerated headline reaction that fails to probe beneath the surface".

In noting reasons to fade the headline flatness, Holt said one is that self employed drove the weakness with a 29,000 drop. That offset a 27,000 rise in payroll jobs that was split between a 15,000 rise in private sector payrolls and 12,000 rise in public sector payrolls. Holt added: "Self-employed jobs are valuable in Canada but the lack of any means to verify this category lends caution. I'm more impressed by the payroll gain."

Secondly, Holt said, the soft headline was driven by youths and in "generally unusual fashion." The 15-24 age category saw jobs drop by about 28,000. The 25+ category enjoyed 25,000 more jobs.

"That's not intended to knock youths as youth employment is always important, but the greater economic impact including ties to the housing and Consumer markets always comes more from the 25+ category."

Thirdly, Holt added, "there's something about Quebec and its youths in particular that drove the softness."

Quebec saw 18,000 fewer jobs while Ontario (+26,000) and B.C. (+7,000) posted gains and others were roughly unchanged.

Holt doesn't think the data changes anything for the BoC.

Meanwhile, David Doyle, head of economics at Macquarie, following the March employment report in the U.S., said while his team's baseline remains for a first rate cut in July, risks are becoming increasingly skewed to a later date - with a rising possibility of no rate cuts in 2024.

Macquarie's baseline remains for just 50 bps of cuts in 2024 and a further 50 bps of cuts in 2025.

"Risks to this are skewed to fewer cuts in our assessment," he said, before adding: "It is increasingly likely that FOMC estimates of the neutral rate will move higher in coming quarters."

Canadian employment edged down 2,000 in March. And while the change in employment itself is small - and entirely accounted for by a pullback in self-employment - RBC Economics writes that the numbers look significantly weaker when measured against another surge in population (91,000) in March and rising labour supply.

The unemployment rate jumped another 0.3 percentage points to 6.1%. That is up 1.3 percentage points from its post-pandemic low and roughly half a percent above pre-pandemic levels.

CIBC Economics said the "cracks that had been emerging within the Canadian labour market suddenly got a lot wider." It noted employment did edge down in March, against consensus expectations for a 25,000 increase.

It added: "With GDP expected to weaken in Q2 following the surprisingly strong start to the year, we would expect to see further softening in the labour market with the unemployment rate peaking close to 6.5%. However, interest rate cuts starting in June should bring a re-acceleration in growth, which will help to stabilize the labour market in the second half of the year and into 2025."

TD Economics, on the U.S. Employment data for March 2024, noted "another solid report," with payroll gains coming in well above consensus and revisions showing a bit stronger pace of job creation in months prior. Through the first quarter, it noted, the U.S. economy added an "impressive" 829,000 new jobs -- nearly 200,000 more than in the fourth quarter of last year. With job openings still elevated and stronger immigration flows helping to alleviate some of the constraints on labour supply, job growth has the potential to run in the 150-200,000 range through the remainder of the year, according to TD.

TD said: "We heard from several voting FOMC members this week and the messaging was consistent: policymakers are in no rush to cut rates. With the labor market still strong and the economy humming, the FOMC can afford to be patient and wait for clearer signs that inflation is on a sustainable path back to 2% before dialing back the policy rate. Post-payrolls release, market pricing for a June cut has narrowed and bets are now more evenly split between June and July. Any upward surprise in next week's CPI release could fully push market expectations of the first rate cut to July, which would align to our forecast."

On markets, CIBC noted the large contrast between better than expected US payrolls data and weaker Canadian figures saw the Canadian dollar weaken to levels not seen since last November.