Everything You Need to Know on Friday: Canada Commits $120 Million to Establish Chip Network as U.S. Races Ahead

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,338.50, up 0.47%

● Canada public-sector hires driving labor-market activity

● Gold prices surge as weak jobs data fuels rate cut expectations

● Canada commits $120 million to establish chip network as U.S. races ahead

● BMO comments on air travellers in the U.S and Canada

Today, the Canadian dollar is trading at 73.46 cents US, a slight increase from Wednesday.

S&P/TSX 60 Index Standard Futures are trading at 1,338.50, up 0.47% from previous close.

Job creation in Canada stalled in June, and a review of the 12-month data show that government hiring has largely driven activity in the labor market. Canada shed a net 1,400 jobs in June. For the year, employment rose 1.7%, or 343,400 positions -- and over half of those new jobs were in the public sector. Job growth in the public sector over a one year basis, up 4.3%, is outstripping hiring in the private sector by a sizable margin, up 0.8%. For months, economists had warned that Canada's public sector had grown too big, citing data showing the payrolls of the federal government in Ottawa had increased 40% since 2015, versus a roughly 14% rise in total employment in Canada.

Gold prices increased after a sluggish U.S. jobs report for June heightened anticipation of a Federal Reserve rate cut, potentially in September. August gold futures climbed $4.90 to $2,374.30 an ounce. The U.S. added 206,000 jobs, fewer than the previous month but slightly above forecast, hinting at an economic slowdown and boosting chances for a Fed rate reduction. Current markets suggest a 71.8% likelihood of a rate cut starting at the September 18 Fed meeting. The slow job growth rate weakens the dollar and lowers Treasury yields, which benefits gold, a non-interest-bearing asset. The dollar index dropped and Treasury yields fell, with the two-year note at 4.654% and the 10-year at 4.307%.

Amid a push to strengthen its semiconductor industry, Canada has announced a $120 million investment over five years for a national chip network, aiming to catch up with the U.S. semiconductor advancements. Industry Minister François-Philippe Champagne revealed the funding, drawn from the Strategic Innovation Fund, to support a $220 million initiative by CMC Microsystems, aiding startups in tech commercialization. The Fabrication of Integrated Components for the Internet's Edge (Fabric) network will reduce prototype costs, grant access to resources, and offer up to $10 million for hardware development.

This move follows a $187 million collaboration with IBM and Quebec to upgrade a chip packaging facility, contrasting with U.S. efforts like the $39 billion Chips Act. Canada's approach has faced criticism for lagging behind, with some calling for a more strategic vision akin to the U.S.-China competition. The Semiconductor Council urged for a Canadian niche in the global supply chain and a semiconductor agreement with the U.S.

Bank of Montreal (BMO) reports a robust start to the summer travel season, despite economic headwinds. U.S. airports recorded nearly three million travelers on June 23, a new high, with the two-week moving average surpassing 2019 levels in the first half of the year. In Canada, passenger traffic has been more erratic but sustained growth since May. A new Canadian record was set recently with over 220,000 passengers screened at the top 17 airports in a single day. BMO suggests this uptick in discretionary air travel spending indicates positive momentum for both the Bank of Canada and the U.S. Federal Reserve to navigate the economy toward a soft landing, even with higher interest rates.