North American markets were in the red Friday amid a mixed bag of quarterly financial reports and signs that Canada’s private sector continued to add jobs last month even as the overall unemployment rate rose in June.
The S&P/TSX composite index dipped 30.30 points to 12,522.62. The Canadian dollar was up 0.20 of a cent to 97.06 cents US.
On Wall Street, the U.S. indexes fell after a small bounce-back in early trading. The Dow Jones industrials index dropped 71.50 points to 15,426.82, the Nasdaq dipped 4.02 points to 3,665.10 while the S&P pulled back 5.18 points to 1,692.30.
An onslaught of data from China, the world’s second-largest economy, was not enough to lift the markets, as figures overnight showed that Chinese inflation in July was steady at an annual rate of 2.7 per cent – slightly below an expected modest increase to 2.8 per cent.
Industrial production rose 9.7 per cent in the year to June, ahead of expectations for a nine per cent increase and retail sales grew 13.2 per cent in July from a year earlier, slightly slower than June’s growth rate.
Overall, analysts said the figures added weight to the argument that the recent soft patch in the economic powerhouse may have come to an end. However, market reaction was fairly muted, as stocks had rallied already on Thursday after strong Chinese trade numbers.
“The news out of China still needs to be digested by the market. The market has been accustomed to relative disappointment on the Chinese economic front – growth slowing through last year and into this year, uncertainty over the direction of monetary policy,” said Andrew Pyle, associate director of wealth management for Scotia MacLeod.
He said as a result, little reaction on the markets may be investors waiting to see weather the numbers are in fact true.
“I think the market is unwilling to jump in with both feet simply because a number of good numbers came in overnight from China,” said Pyle, from Peterborough, Ont.
“You have a market now that is tired. We’ve been through the second quarter of the U.S. earnings seasona You have a market now that is searching for the next reason to stay positive and I think you’re starting to see some of that fatigue.”
Meanwhile, a double-dose of economic news was also released in Canada, potentially indicating that the economy wasn’t faring at a pace that some have come to expect.
Statistics Canada says a surprisingly high 39,400 net jobs were lost last month, with public sector workers and youth taking on the biggest share of the losses. On a positive note, however, Canada’s private sector employers added 31,400 jobs.
The official unemployment rate is now 7.2 per cent, one-tenth of a point higher than in June.
The Canada Mortgage and Housing Corp. also reported that total housing starts continued to be relatively stable in July.
The federal agency estimates there were 17,993 actual starts in July which, extrapolated over 12 months, gives a seasonally adjusted annual rate of 192,853 starts. That was slightly down from June’s adjusted annual rate of 193,797 starts.
On the TSX, BlackBerry (TSX:BB) shares rose more than five per cent, or 49 cents, on news that the Canadian smartphone-maker’s chief executive officer and board of directors are warming to the idea of taking the company private.
The reports from Reuters said no decision was imminent and BlackBerry issued a brief statement saying it doesn’t comment on rumours or speculation. The Toronto-listed shares climbed to $10 in late-morning trading.
Meanwhile, autoparts giant Magna International Inc. (TSX:MG) reported a $415-million (U.S.) profit and record-high second-quarter sales, which were up 16 per cent from the same time last year and well above analyst estimates.
Magna now expects between $33.3-billion and $34.7-billion of sales in 2013 – about $700-million higher than Magna’s outlook in May when its first-quarter results were issued. Magna shares were ahead $2.41 or three per cent to $82.56.
Brookfield Asset Management Inc. (TSX:BAM.A) is also reporting $802-million of net income and $464-million of funds from operations for common shareholders in the second quarter. Both results were more than double the levels a year earlier, when the Toronto-based asset manager had $379-million of net income and $159-million of funds from operations.
Brookfield is one of Canada’s largest asset managers, with numerous publicly traded subsidiaries and investments primarily focused on real estate, power generation and natural resources, particularly in the forestry sector. Despite the positive earnings, its shares dipped 14 cents to $38.44 On the commodities front, December bullion dropped 80 cents to $1,309.10 an ounce.
The September crude contract on the New York Mercantile Exchange moved up $1.98 cents to $105.30 a barrel. Copper was ahead four cents to $3.31.