A Toronto Stock Exchange (TSX) logo is seen in Toronto in this file photo.© Mark Blinch / Reuters
Canadian stocks fluctuated in trading Friday as gains in commodity shares lost momentum, after U.S. Federal Reserve Vice Chairman Stanley Fischer said Fed Chair Janet Yellen's comments on the U.S. economy leave the door open for an interest-rate hike in September.
The S&P/TSX Composite Index wavered throughout the day and edged higher by the close up 9.16 points, or 0.06 per cent to close at 14,639.88 in Toronto. The industrial, consumer discretionary, financial and energy stocks were the biggest gainers while utilities, materials and telecom services stocks were the biggest decliners.
The Canadian dollar fell 0.47 of a cent to $76.92 cent (U.S.).
Raw-materials stocks bounced after wiping out a 2.2 per cent climb, while commodities producers from Potash Corp. of Saskatchewan Inc. to Methanex Corp. declined as the U.S. dollar surged on Fischer's remarks. Precious metals companies held onto gains, with Barrick Gold Corp. up 0.2 per cent. CIBC gained 0.5 per cent and Royal Bank added 0.2 per cent.
In New York, stock market optimism fizzled after Fischer and Yellen's comments. The Dow Jones industrial average fell 53.01 points, or 0.29 per cent, to 18,395.40, the S&P 500 lost 3.43 points, or 0.16 per cent, to 2,169.04 and the Nasdaq Composite added 6.71 points, or 0.13 per cent, to 5,218.92.
Gold futures in New York pared an earlier advance. Fischer told CNBC that based on Yellen's speech, Fed watchers should look for higher borrowing costs in September, and possibly two hikes this year. The case to raise interest rates is getting stronger in the U.S. as the economy approaches the central bank's goals, Fed Chair Janet Yellen said in the text of a speech Friday in Jackson Hole, Wyoming.
"Rates aren't going to above 2 per cent, so even if there is a hike, they're retaining maximum flexibility for the rest of the year and into the next," said Frank Maeba, managing partner at Breton Hill Capital in Toronto. "What she's doing is quelling future uncertainty. Even if we do hike, you guys are being a little bit myopic."
Canadian Imperial Bank of Commerce added 0.5 per cent for a sixth-straight gain, the longest streak in more than two months, as financial services stocks increased 0.1 per cent, one of six industries to advance in the S&P/TSX.
CIBC, Toronto-Dominion Bank, Royal Bank of Canada and Bank of Montreal all topped analysts' expectations this week, driving a 1.5 per cent weekly advance for financial service stocks that's the most in six weeks. Bank of Nova Scotia, the nation's third-largest lender, is on deck to report on Aug. 30.
The first-half rally in raw-materials producers has lost steam in August, with the group the worst performer among 10 industries in the S&P/TSX, slumping 7.6 per cent. Meanwhile health-care stocks are up 18 per cent for the biggest advance, led by Valeant Pharmaceuticals International Inc.'s 37 per cent rally in August. The drugmaker affirmed its 2016 outlook earlier this month, restoring some confidence in analysts and investors in its turnaround strategy.
The materials group remains on track for the first annual advance in six years, up 49 per cent this year, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 21 per cent in the same period, on pace for the strongest in seven years.
That's boosted the Canadian equity benchmark to a more than 12 per cent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 23.2 for the S&P/TSX, opening up a 14 per cent premium over the S&P 500 Index.
Torstar Corp., owner of the Toronto Star, Canada's largest circulation newspaper, jumped 7.7 per cent, the biggest increase in a month. Fairfax Financial Holdings Ltd. bought 3.5 million shares of the company, boosting its stake to more than 27 per cent.
Bloomberg News