TORONTO — A positive start to October helped North American stock markets to mitigate deep losses for the week as a potential new COVID-19 drug renewed optimism about the recovery.
The S&P/TSX composite index closed up 80.62 points to 20,150.87, but was down 1.2 per cent for the week.
In New York, the Dow Jones industrial average was up 482.54 points at 34,326.46. The S&P 500 index was up 49.50 points at 4,357.04, while the Nasdaq composite was up 118.12 points at 14,566.70.
The Canadian market was helped by GDP numbers that showed growth in August and a smaller-than-expected decrease in July. Statistics Canada said the real gross domestic product dropped 0.1 per cent in July and an initial estimate for a 0.7 per cent increase in August.
The service sector is improving, which is a sign that the economy continues to recover even though it’s a bumpy ride, said Pierre Cléroux, chief economist for the Business Development Bank of Canada.
“It’s not as strong as expected (but) it’s still going in the right direction, and I think that’s a positive news,” he said in an interview.
Markets were also helped Friday by pharmaceutical company Merck saying its experimental COVID-19 pill reduced hospitalizations and deaths by half in people recently infected with the coronavirus.
Merck’s drug would be the first pill shown to treat COVID-19, a potentially major advance in efforts to fight the pandemic.
The news was a boost to airlines and travel companies that have been severely hurt by the pandemic.
Air Canada shares surged 6.5 per cent to propel industrials, one of six sectors that were up on the day.
The heavyweight financials sector gained 0.7 per cent with shares of Canadian banks rising, including Toronto-Dominion Bank that was up 1.8 per cent.
Energy continued to rally despite a drop in natural gas prices as crude oil reached a near three-month high.
The November crude contract was up 85 cents at US$75.88 per barrel and the November natural gas contract was down 24.8 cents at US$5.62 per mmBTU.
Shares of Vermilion Energy Inc. rose 3.4 per cent while Imperial Oil was up 2.5 per cent and Crescent Point Energy Corp. gained 2.4 per cent.
The Canadian dollar traded for 79.03 cents US compared with 78.88 cents US on Thursday.
Technology reversed recent losses as Hut 8 Mining Corp. climbed 9.7 per cent.
Materials were slightly lower even though metal prices increased.
The December gold contract was up US$1.40 at US$1,758.40 an ounce and the December copper contract was up nearly 10 cents at US$4.19 a pound.
Despite Friday’s rebound, markets were down for the week and while the TSX was 2.1 per cent below where it was before the start of the volatile month of September.
“This is a small rally today,” said Cléroux.
“I think it’s probably the end of this small correction we saw in September. … And today, although it’s not a huge increase, it’s probably the beginning of a series of increases that we’re going to see in the next few weeks.”
Markets sold off after the U.S. Federal Reserve suggested it would soon begin to taper its bond purchases ahead of a likely interest rate increase. And the central bank said this week that it was concerned about the high level of inflation and supply chain issues that persist.
Another irritant is the health of the Chinese property market with Evergrande reportedly missing debt payments.
“I think September was kind of a mild correction and I think we are going to see a rebound in October,” said Cléroux.
“Not a strong rebound, but I think we’ll do better in October than we did in September.”
This report by The Canadian Press was first published Oct. 1, 2021.
— With files from The Associated Press.
Companies in this story: (TSX:VET, TSX:IMO, TSX:CPG, TSX:AC, TSX:HUT, TSX:TD, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press