Strong U.S. growth with easing inflation lifts sentiment as commodity slump hits Canada

Global markets today are being driven mainly by the ongoing reaction to strong U.S. economic data and weakness in key commodities that is pressuring Canadian equities. In the United States, investors are responding positively to a combination of robust job growth and easing inflation. January payrolls rose by 130,000 jobs, far above expectations of 70,000 and more than double December’s gains, while the unemployment rate ticked down to 4.3%. At the same time, inflation pressures appear to be moderating: core consumer prices increased 2.5% year-over-year, the lowest pace since early 2021, and headline inflation slowed to 2.4% from 2.7% in December. This mix of solid economic growth and cooling inflation is supportive for corporate earnings and reduces fears of renewed aggressive interest-rate hikes, helping lift major U.S. indices, with the Dow Jones, S&P 500, and Nasdaq all trading higher. In contrast, Canada’s stock market is under pressure as falling commodity prices weigh on resource-heavy sectors. The S&P/TSX composite index is down sharply, dragged lower by declines in base metals and energy shares, alongside weaker crude oil prices and a steep drop in gold. This highlights a divergence between the U.S. and Canadian markets: while global risk sentiment is supported by the favorable U.S. macro backdrop, commodity-linked markets are facing headwinds from softer demand or shifting expectations for global growth and inflation. Overall, today’s trading is shaped by optimism around the U.S. economy and inflation path, tempered by concerns in commodity markets that are particularly impacting Canada and other resource-focused regions.